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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: Alok Sinha who wrote (5940)	12/4/1997 1:47:00 AM
From: space cadet	Respond to of 64865

In general you are right. However, the problem with long term calls is that then you are locked in to holding the stock for that length of time. Provided you are going to hold the stock that length anyway it's ok. However, if one is somehow smart enough to know just where the stock will close on expiration day then one can do much better than your strategy. I would never cover call a stock for 50c but for a dollar or more it is worth it. This means that as long as the stock doesn't finish more than a dollar above your call strike price you can just buy the call back at expiration, if you wish. I'm still working on the strategy, and obviously it will only work on those stocks which you follow so closely you can anticipate where they will finish. However, the mm's provide option sellers with some help as usually they will force the stock to close very close to some strike price. Thus realistically the choice is greatly narrowed and it becomes a problem of guessing which strike price. I have only started playing this game recently but so far I've done pretty well. This month is especially difficult because it seems that sun is now in breakaway mode. Sun usually is ideal for covered calls because usually it makes small but steady gains every month, which is just what is desired for covered calling. Later, space