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

To: Bridge Player who wrote (4491)	10/9/2006 10:10:53 AM
From: Dr. Id	Read Replies (1) \| Respond to of 5205

I am mindful of something that you may have mentioned from time to time......only sell a put on something that you wouldn't mind owning at the price. This has been my buying strategy on some stocks over the past several years. I sell naked puts on something that I am thinking of buying. If the stock goes up, I keep the premium. If it goes down, I buy the stock at a discount of what I was going to pay anyway. In that sense, I can't lose (anymore than I would lose by buying a stock that goes down...which is what always happens anyway!) I sold the QCOM Jan 40's last month. I got $4.60 in premiums, with the idea that QCOM will rise in the fall. Even if it doesn't get to 40 (say it hovers around 38), the time premium will erode and I may buy the puts back. Or, I'll get the stock for $35.40. The only danger is that the stock can be put to me before Jan, in which case I will receive it for $35.60. Given my goals, it isn't that dangerous a strategy.