Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: rkf who wrote (7381)	5/1/1998 8:07:00 AM
From: Herm	Respond to of 14162

Hi Kent, Reminds me of the saying that "even a broken clock is right two times a day." :-) Sure, I had CALLs that doubled in two days time for a fantastic return. But, I've had more CALLs where I barely broke even. I rather sell them. The majority (90%+) of CALLs I ever purchased with the intention of exercising in order to CC has been profitable. That is why I'm so inclined to buy the options first before the stock as an entry into CCing a new stock. You know, I buy PUTs less often than CALLs. I must say that my profits from PUTs hit more often for a profit. In other words, when I buy PUTs as insurance it seems to work out. I have concluded that when a stock price starts to really drop on high volume, the price continues to drop for a longer time than two to four days. They also seem to move down further than they move up in points. Must be the gravity thing? Hence, you can cushion your losses with the PUTs for peanuts if you buy them at new price highs, around earnings release dates, after dividend pay outs, or after splits announcement before the record date. Watch a stock making a new high and keep an eye of the PUTs open interest for one or two strike prices below the nearest high price. I would venture to say those funds must first load up on PUTs before they dump massive blocks of stock. What ever they lose as the price drop as everyone heads for the exits is more than recovered by the PUTs as they appreciate. Hence, the whole event for the turnover in the stock actually generates more revenue. Then, they can even exercise the PUTs.