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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: Herm who wrote (9269)	12/17/1998 8:44:00 PM
From: ed c.	Read Replies (1) \| Respond to of 14162

Hello Herm, I'm not going to pretend that I have all the answers, or the holy grail, but I have found that I can eliminate a great deal of the risk by trading an index over the individual stocks, which can blow up in your face if some nasty news comes out. Also, there is a lot more flexibility when you trade an index vs. the individual stock. Such as more strike prices, volatility skews in the options, VIX indicators apply better, eliminating company specific problems, and many times better fills due to better liquidity. In answer to your question regarding being approved. Just like with options on individual issues, it depends on the type of trading you're doing as to whether you will be approved. Obviously, trading naked is going to require a higher approval level than say vertical spreads, etc. As far as the amount of money needed, that too depends on your trading style, amount of risk you're willing to take etc. If you're trading equity style margin indices and you're doing spreads, you'll need a minimum of $2,000 that can't even be traded, then probably at least another $3,000. It depends on your particular brokerage house. I personally wouldn't even think about trading it for less than $10,000 because you need money for the trades that don't work. If you don't have that amount, and you're serious about trading, pool your money with a couple of buddies and trade it all together. I think covered calls are great, especially for beginners. But if we get into a free fall, all the rolling down in the world won't save you. However, statistical studies have shown covered calls to be an attractive strategy over time. Just be able to withstand a lot of pain once in a while. I am trading a sort of hedge which combines the concept of covered calls, ratio spreads, and vertical debit spreads which enable me to profit almost no matter what direction the market goes. I survived our July-Oct. debacle, so I must be doing something right. I hope I was able to help you a little. I am a new member of silicon, but like a lot of people, I have lurked into the posts every now and then. Happy trading, ed