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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: Douglas Webb who wrote (8776)	10/7/1998 5:56:00 PM
From: Vol	Read Replies (1) \| Respond to of 14162

Doug, Nice research on the index spreads. If you do both credit spreads I think it's called a condor b/c of how it's proft/loss position looks on a graph (see McMillan). I originally thought about this and the probability is that it will work fine. I've dissected each move and think I like selling naked index calls the best for both profit and safety. Selling puts is OK but as we all know, the underlying or even broad index can tank without much warning. Then you're in a world of hurt. Been there. On the other hand, individual stocks can shoot up, e.g. on good earnings, rumors, buyouts, or manipulation by Vinik (VVUS). Broad indices dont have these risks. Rarely does an index catapult skyward like it nosedives downward. The only exception that I can think of is after a quick drop, such as the day after the Oct 87 or Aug 98 big one day plunges. Even I wouldn't be stupid enough to sell naked calls the day after a 6-8% drop. Plus my goal for writing naked index calls is to not only generate income, but mainly to hedge my long portfolio. Selling puts exposes me to more potential downside. Good discussion. Vol