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Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Greg Higgins who wrote (235)	1/13/1999 6:45:00 PM
From: Ted S	Read Replies (1) \| Respond to of 355

Hi Gregg, I just saw your post today. I too trade with "Ben and Jerry". Not for awhile though. I was heavy into covered calls using deep in the money calls. Good protection with limited profit potential. I used primarily high tech stocks (offered good premiums). Because of their high volatility, I got whip-sawed a lot where the stock would drop 20% and I would have to bail out of my covered call position because I hit my downside breakeven target. The sad part is usually the stock would then jump right back up again! Interested in your strategy of using LEAPs and writing calls against them. Minimally this strategy looks like it would generate a higher ROI (return on investment) since the LEAPs don't require as much capital as the common stock purchase. A couple of questions: 1. What kind of calls you use: out of, at, or deep in the money? 2. How do you bail out at expiration (if the call is in the money)- sell the LEAP and buy back the calls? Or do you convert the LEAPS? 3. What is your average ROI from this strategy? 4. Is the downside protection of the LEAPs better than holding the common stock? Thanks. Ted