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Strategies & Market Trends : Short-termSelling Puts (Covered Calls by another name) -- Ignore unavailable to you. Want to Upgrade?

To: Rocky9 who wrote (17)	2/14/2006 2:07:17 PM
From: KCMuu	Read Replies (1) \| Respond to of 66

Hello, just found your board - very interested. I've been selling puts (cash covered) or selling calls (covered) for about 15 months. Here is my approach (must meet all conditions): Find 10~12 stocks across different sectors. Sell options just one month out (capture premium). Option strike price ~ 5% below current stock price. Look for a return of ~ 3% if stock stays above strike. Stock should not have a known event (EA, planned info release, etc) before expiry. I've been averaging ~ 1% better than S&P each month, with lower volatility. Over the long run, maybe the ~ 3% cap on my gains may get killed by the losses in down months? But, on average, I can take ~ 8% drop before I lose money, there is some built in protection. I could sell ATM puts. There would be less protection, but higher return in the good months. I prefer the protection, but maybe that is a mistake. Comments? -KCMuu