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Strategies & Market Trends : Options for Newbies -(Help Me Obi-Wan-Kenobe) -- Ignore unavailable to you. Want to Upgrade?

To: ---------- who wrote (579)	1/21/1998 11:23:00 PM
From: Schiz	Read Replies (1) \| Respond to of 2241

I didn't think of that. It makes perfect sense though. Is there other reasons people might exercise them early? Perhaps if you wanted to use this strategy,you could do it shortly after dividend so you would have a year of hopefully profitable time value to offset the possible exercise. I like the near term covered call example though. I've been looking at this for a possible exit strategy on certain stocks. A stock you feel confident has a limited short term downside but is at a point where you are thinking about selling anyway. Sell a covered call, hold the stock a little longer and get a little extra cash. Limits the upside so you wouldn't want to do it with a stock that may take off soon. Doesn't protect the downside so it should be a stock you're willing to hold long term if it does go down. How often do you think options get excercised? I've considered simultaneously selling both covered calls and puts. At first I thought this was a no lose situation. I beleive it would be no lose if the options were european style. Is that correct? The call offsets the put, you take the time premium. The problem occurs if the stock tanks and the put gets excercised and then it recovers and the call gets excercised, you could really get screwed. Is there a term for that? I read through some option strategies a while back, bear spreads, bull spreads, bear spreads with puts, straddles. I'm now trying to look a little more into these strategies. I don't expect to make millions trading options. Up to this point I've bought a couple puts and calls, none of which appear to be making any money(2 of the 3 expired worthless). I bought out of the money options so I'm not worried about the loss, just kinda testing the waters. I've heard that the people that make money on the options are the people that sell the options. I believe this is true. They make money off peoples greed. I don't have the stones to sell naked calls but am considering the covered calls as a way to get a little extra pocket change from time to time.