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Non-Tech : Paired Trades and Hedging Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (39)	12/3/2004 1:11:36 PM
From: Sam Citron	Read Replies (1) \| Respond to of 136

by selling a covered call you are effectively selling part of your position The way I look at it is when I sell an OTM CC, I trade a pie in the sky for something real. I trade an uncertain and unlikely contingency (that company XYZ will go up by more than X% in a fixed time period) for actual money in the bank. Roughly how much of the position (at this point in time) is given by the delta on the options you sold. I am not shy to admit I have never "studied" options (the "greeks"), and I thank you for introducing me to them. I will need to read up on delta and brethren and get back to you. I'd start from the premise that stocks and options are both fairly priced in general. I subscribe to weak-form EMH in the short run and agree there are no free lunches. I am merely looking for a way of modelling covered call writes in order to simplify and potentially automate the task of selection according to predefined criteria. Perhaps as I study the "greeks", I will see in them the parameters I am searching for. no general rule is going to produce any above-average returns Peter, unless you simply want to ascribe it to a high propensity to gamble, you would not be sitting here if you did not think you had a good chance of producing above average returns. In your particular case, I would say that the opportunity cost is particularly high. Of course it is difficult for an economist to define "fun". <g> Sam