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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: Carmine Cammarosano who wrote (23553)	11/15/1997 3:31:00 AM
From: Xingbo Wang	Read Replies (2) \| Respond to of 61433

One thing to keep in mind is that selling covered calls (or selling naked puts, the two are equivalent) gives you limited upside (out of money amount + option premium) and potentially huge downside. I made the mistake myself when I sold COMS 60 covered calls after it ran up from 25 to 59. Now with COMS at 30, I lost more money than what I can get from selling covered calls for 10 times. If you think the stock has had its run, you should just sell the stock rather than sell covered calls. Better yet, you should buy puts so you maintain its upside but limit its downside. So the only time you should sell covered calls or sell naked puts is when the stock is stuck in a tight trading range and is not expected to break out either to the upside or to the downside during the life of the options.