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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Mike Learner who wrote (7326)	4/22/1998 11:06:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Hi QuoteGuy, Welcome aboard! Make sure you drop by Doug's web site for some free goodies. webbindustries.com We have some Excel templates to keep track of all your premies from CCs. Now, to answer your questions: 1) After selling calls, would it be wise to buy back same calls when the premium value drops 75% or more? In my opinion, owning a stock outright (without any PUTs or CALLs as insurance) is the most risky position. Writing CCs brings in $ premies that can offset your give $ backs (downward price movements). So, if you can cover and "lock in" 75% of the profits (before the expiration date) from the premies then you are free once again to roll upwards in strike price and out one or more months for additional income. 2) when underlying stock appreciates higher, at what percentage of the premium value should the calls be purchased back and sell calls with one strike higher with still being "in money"? and Personally, I would allow myself to be called out with a profit rather than covering at a loss and rolling up strike prices! Less risk for you! If you cover the CC the stock may move against you! Then, you have a potential problem of triggering a wash sale if the stock moves backwards and you have to pick a previously covered strike price and month. 3) Should NO. # 2 question be executed for same month or the month after? If would be wise to pick the next month and a different strike price if possible to avoid that 30-day rule for wash sales.