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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: Tom K. who wrote (7828)	7/7/1998 8:23:00 AM
From: Joe Waynick	Respond to of 14162

Tom, the key is the stk. If you're working with a fundamentally solid stk, you WANT to take advantage of temporary pullbacks. All stks have them, but you only want to buy the ones on quality stks. Pick up the bargains, stick to your original strike and you'll make a lot of $$. If it falls twice, write CC's on your entire position. You collect four premiums where you would only collect two. That gives you a lot of cushion. Use some of your call / put buyers money to buy cheap puts for insurance. What if it falls a fourth time? First of all, your analysis of the stk would be wrong. Stick to quality. However, any stk can go down. Your "options" are to CC for a B/E, or implement a CC repair as outlined by McMillian. Buy cheap puts. If your stk rebounds during a repair, roll into a recovery spread. It's very difficult to lose money when you have a systematic strategy for every market contingency. Know your exit before you enter.