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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: VincentTH who wrote (10703)	5/10/1999 7:43:00 PM
From: Teresa Lo	Read Replies (1) \| Respond to of 14162

<<The advantage of CC is that you can leg into the position by only shorting the call when the stock has appreciated, thus effectively locking in the gain (well, to some degree, Herm would call it "protection"). >> The only way to lock in a gain is to buy puts on your long position. If you were to use the naked put writing, the best scenario is to find a stock that you would like to own, and on a huge panic down day after a long string of down days, when blood is splashing everywhere, sell some naked puts...this way you will capture the huge premium and on the off chance that you get exercised, you will have bought what you wanted at a good price plus you got much more for the premium than was possible doing covered call writing in a low volatility environment. The bottom line is people like to think of covered calls as income and like to write them like clockwork...both strategies have their merits buy I think CC is more appealing to the public since it seems like getting money for free.

To: VincentTH who wrote (10703)	5/10/1999 11:08:00 PM
From: Tom K.	Read Replies (1) \| Respond to of 14162

Just my 2 cents on PUTs vs. CC.... I find the CC locks me in.... if stock goes up I have to wait 'til expiration to get out.... if it drops, I have both the stock and CC to deal with for repair. For PUTs, if the stock rises, I can lock in my profits whenever I want.... if it tanks, I can get exercised at a good price and do CC's... OR... I can roll the PUT out and down and sometimes get more premium. Even though the graphs are the same, I find the PUTs to be far superior to the CC's as my base strategy. Tom