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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: alanrs who wrote (4381)	4/9/2006 8:58:55 AM
From: Jerome	Read Replies (2) \| Respond to of 5205

Covered call balance....over the years i have concentrated my portfolio in specific areas to capture the best covered call premium. Now I have a more balanced portfolio that act in opposing directions on any given day. 1)About 30% in energy stocks. (CHK, WMB, EP PKD...and XOM and SJT are under consideration). 2)About 50% in tech stocks....(AMAT, NVLS, DELL, INTC, TER, MU, TXN and MOT. 3) About 20% is Misc (GM, LU and NT) When oil prices spike the energy stocks spike and the tech crashes. When oil prices fall the oil stocks crash and the techs rally. (GM , NT and LU are on a different program that defies rationality. But they are good covered call writes) Over the years I have determined that the most important feature of covered call writes is that the underlying stock not crash and burn. From this standpoint CHK, WMB, AMAT, TXN, DELL, MOT, and NVLS have consistently stayed in a range that yields good covered call premium without over concern about the crash and burn problem. Concerning Margin..(example)...If one of my accounts has value of 100K and the value of the stocks on margin is 50K then the margin cost of that margin is 9% per year or $4500. (which is $375.00 per month) If that account will consistently generate $2000 a month in covered call premium then I'm satisfied. I restrict my buying to terrible down days like last Friday and always have a short list of stocks that I would own if the price were right. Any other suggestions in managing a covered call account would be appreciated. Jerome