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Strategies & Market Trends : Point and Figure Charting -- Ignore unavailable to you. Want to Upgrade?

To: The Perfect Hedge who wrote (5531)	8/7/1998 9:36:00 PM
From: james ball	Read Replies (1) \| Respond to of 34811

Tom Dorsey to group. Lets talk a minute about selling calls. I developed and managed an option strategy department for Wheat First Securities for 9 years. I came to find out what works and what doesn't work in options. One thing that works is using covered calls as a means to take the emotion out of the sell discipline. In my account I began selling calls against the whole portfolio in April when the Option Stock Bullish Percent revesed. The BP was high and risky. I in essence allowed the Option Clearing Corporation to take the stock away from me rather than me having to decide to sell. The first month, April, 1-3 was called. I sold the May month on the rest and 1-3 of that was called and by June expiration I had gone to 80% cash. I could have been stuck with stocks that fell rather than rose to be called away but if that did happen at least I took in premium and could rewrite until it was called. PFE I bought at $80 rode it to $120 and began selling calls on the at the money line. I took in 5 points, there abouts, each time and ended up last month selling the stock at $110 with four writes of $5 each. That put me out at $130. Keep it simple and don't fool around with buybacks etc. Just sell the call when you are ready to sell and let it go. This works best at tops because there are no disconcerted investors yet. The BP reverses , you sell calls and the Dow Jones floates to a new high carrying your stocks up to be called just before the market begins to slip away. Tom Dorsey