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Strategies & Market Trends : cash flow investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: deeno who wrote (4)	7/21/2011 6:38:51 PM
From: tyc:>	Read Replies (1) \| Respond to of 94

That is one of the reasons Short Term calls are used..... their premium erodes faster.and even if you're assigned the stock is usually within range to allow repurchase because little time has elapsed. Also, it's axiomatic that expiring calls should NOT be purchased because of the risk of loss. If they are a bad BUY, they are a good SELL. Statistics of my post show nine calls exercised and all the rest expiring worthless. There's no way of knowing which, but I'll bet 70% expire worthless over time., Important to realise that even when the call is exercised the call premium was INCOME, because the stock transaction was profitable without the call premium..... if you selected an o/m strike. (It's paradoxical that loss of market value can occur only when call is not exercised). Dividends are "at risk" only once each quarter. If you want to avoid that risk don;t write a call on that stock that month. However the risk of losing the dividend is usually inconsequential.

To: deeno who wrote (4)	7/21/2011 7:32:37 PM
From: wilywilly	Read Replies (1) \| Respond to of 94

deeno, Whether a call gets early assignment or not depends on the dividend value vs. the price of a put to protect the purchase at the strike price. Here is a post that describes the scenario in detail: Message 26927544 I have followed this guideline since reading that post, and have found it to be 100% reliable, in my experience. In cases where I previously would have unnecessarily rolled out a covered call to avoid early assignment by "dividend capture", I have compared the dividend to the put cost, and sat tight if it's less. Thanks, kaka!