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Strategies & Market Trends : Calls and Puts for Income -- Ignore unavailable to you. Want to Upgrade?

To: Delfino R Zavala who wrote (5792)	9/3/2013 10:21:51 AM
From: robert b furman	Read Replies (1) \| Respond to of 5891

Hi Delfino, I've only sold naked puts on blue chip with a nice dividend: Amat and Intc They both are so big - a takeover is not much of a consideration. If I owned some stock - I'd then consider selling calls.If you lose the stock - you can most often buy it back on the next swing. I've eased into selling puts with the intent of buying the stock at a below market price . It has not yielded me any stock,but I've really learned to like selling puts. The two stocks I've selected are range bound and traveling sideways for years. My biggest fear is the stocks go up and I lose my honey hole. If the stocks go down ,I buy them and then enjoy the continuous cash flow of the company through recieving the dividend. I think it is one of the best kept secrets in Wall Street and it provides large income if you have the cash to play the game. Took me 30 years to fall into the awareness. Some day the sector will get hot and I'll be wishing I had bought the stock and not just made money - NAH LOL Bob

To: Delfino R Zavala who wrote (5792)	9/3/2013 10:43:56 PM
From: TheNoBoB	1 Recommendation Recommended By Jim P. Read Replies (1) \| Respond to of 5891

Can you comment on the risk of a company getting bought out at a much higher price than your naked call? The message you responded to may not have been as clear as it should have been -- which is why I don't write for a living :) I virtually never sell naked calls, even on the most promising chart patterns. If the call has no stock under it, I just about always use a spread, buying a call above the short strike at a level where I'm comfortable with the risk profile. Yes, that costs a bit of premium, but IMHO it's worth the expense. Like you, I want an exact answer to the "But what if it keeps going up??" question. As the other participants have pointed out here, company selection plays a role too, but there's been some big buyouts over the years, and I prefer to keep my guts on the inside, and forgo a bit of the glory <G>