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

To: TimF who wrote (4679)	12/21/2006 5:00:00 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> That's true but its not very relevant to options purchases, at least not in some overall or universal sense. Many of us feel that buying naked calls/puts is very relevant, and choose to sit on the dealer's side of the table by selling covered calls. I'd contend that buying calls is never less risky that buying the stock. Leverage works in both directions, and those who go long the call must also contend with decaying premiums, so they're always under the gun. Some feel they can lessen that factor by dealing in LEAPS, but I can assure you from personal experience that it's much easier to lose a fortune in LEAPS than it is in stocks. Good luck. If you decide to go long on calls or puts, post your results. I'd love to see you prove me wrong. duf

To: TimF who wrote (4679)	12/21/2006 5:17:28 PM
From: alanrs	Read Replies (1) \| Respond to of 5205

Of course if one has to buy calls, buy as much time as possible. However, just because the near term options are going for little doesn't mean the longer terms ones are. The bad experience I had with buying leaps and selling short term calls against them happened right around 9/11, when I was still relatively new to this. I had collected the premium on the short term call in August, and obviously collected the premium in September, but all the leaps became worthless overnight. While I did loose money, that was not the part that bothered me most. The worst thing was that I had to look at them in my portfolio for 2+ years until they finally expired. I would have paid someone to take them off my hands, but there is no mechanism for entering a -$.05 ask. ARS