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

To: Uncle Frank who wrote (4581)	11/19/2006 8:22:13 PM
From: Al Greenleaf	Read Replies (1) \| Respond to of 5205

>>This thread has promotes writing calls against core holdings as a means of generating income. If your plan is to remain invested in a stock, any covered call premiums generated by them are pure gravy.<< Thanks for the response! I think the concept that I missed was the one of "core holdings". I can see how selling calls would help a lot if you plan to hold a stock regardless of it's ups and downs. I hope you don't mind if I ask one more question. Under what circumstances would you sell a core holding? I am trying to figure out when it is best to buy and hold and when it is best to bail when the trend line is broken. I know a lot of people seem to do well with covered calls, and I am trying to figure it out. All help is appreciated.

To: Uncle Frank who wrote (4581)	11/27/2006 5:37:47 AM
From: Hepps	Read Replies (1) \| Respond to of 5205

It looks like I'll be taking my plunge into Covered Call selling in my ROTH with the July 07 MSFT 32.50 Currently, stock is selling for 29.70 If I sell the 32.50 call at .95; If the stock is dead money, my annualized Rate of Return, 5.95 Plus 1.2 for the dividend is a 7%+ return. If I get called, annualized rate of return is 20.77%. Risk is obviously a sharp downdraft, but since I'm working with shares of MSFT I'm comfortable with this possibility.I haven't factored in interest or commissions. I'm not confident that they won't get called away, but then making 21% on top of the run they've recently had isn't a bad thing either. I'll sell covered puts on weakness for a covered strangle, but right now I don't want to tie up the cash on such a low rate of return for a stock who's price I don't consider that attractive. Hepps