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Strategies & Market Trends
The Covered Calls for Dummies Thread
An SI Board Since April 2001
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Introduction Compact
The Covered Calls for Dummies Thread

Welcome to the Covered Calls for Dummies thread. This is the place to post your thoughts, questions, and comments on how to use covered calls to generate enhanced yields from your tech investments.

The thread is geared, as its title suggests, to beginners and/or those interested in relatively simple and straightforward strategies. We hope that polite, honest discussion of our plans, successes, and failures will sharpen our investing skills and teach us how to harness the volatility in our portfolios.

As one or our posters explained in #reply-17321300 :

"Many of us write against very long term core holdings, and don't concern ourselves overly with short term price fluctuations. We regard cc's as a method of generating income without disturbing our positions, and measure the efficacy of our approach purely in terms of net retained premiums. As a result of repeat cc sales, some of our stocks have adjusted cost bases of zero or less. "

Resources

Option chains are available on the NASDAQ website at:
options.nasdaq.com
Select this reference and then type the company symbol in the URL address box after the "selected=" or in the box labelled "Add a Security". Save a bookmark to the resulting page.

Tracking the cboe indexes has become an additional element in the covered call decision making check list. Fellow dummies looking to get quotes on the vix and vxn might find the following link useful (thanks Dale Russell & Uncle Frank):
finance.yahoo.com^vix+^vxn&d=2b

Lawrence McMIllan's book (Options as a Strategic Investment, 3rd ed, p.83, New York Institute of Finance, Paramus, NJ, 1993.) is often mentioned by posters on this thread. It is considered to be the bible of options trading. The first few chapters are the most useful ones for our purposes.

A popular book for beginners is Michael Thomsett's Getting Started in Options, 4th Ed. If you get serious about writing covered calls you'll want to consult additional books (and the members of this thread<g>).

LEAPS strategies are carefully considered in LEAPS: Long-Term Equity Anticipation Securites: What They Are and How to Use Them for Profit and Protection by Harrison Roth.

--Mike Buckley and Dale Russell have suggested we mention that when a stock showing a paper profit is called in a taxable account there are tax consequences that pose risk not present in a tax-deferred account. The calculated yield needs to be adjusted downward by the individual's marginal tax rate (assuming one knows what that will be in advance) to better understand that risk.
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5205Buying RDS/A around $63. that gives me a 5.7% Dividend, and I'm planning to Hepps-6/30/2013
5204I just found out myself a few weeks back when I lamented that I couldn't wriHepps-5/16/2013
5203I found it on the Fidelity site! Thanks, Hepp. It's always nice to learn sUncle Frank-5/14/2013
5202UF, I trade with Schwab, when I type in AAPL the options page gives me a tab foHepps-5/14/2013
5201Thanks for the info, Hepps. I'm trying to get a quote. What's the syUncle Frank-5/14/2013
5200UF, The aapl7 is a mini option, 10 shares rather than 100. trades just like the Hepps-5/13/2013
5199Forgot. Thanks.Robohogs-5/11/2013
5198AAPL actually quite weak this week (gained all of 2-3 points as GOOG soared and Uncle Frank-5/11/2013
5197AAPL actually quite weak this week (gained all of 2-3 points as GOOG soared and Robohogs-5/10/2013
5196I've been trading AAPL lately. Wrote the 390 put last week before earnings fUncle Frank15/9/2013
5195I've been trading AAPL lately. Wrote the 390 put last week before earnings fHepps15/6/2013
5194You called it, Uncle. Did the stock get put to you?I may have called it but thekelseysuncle15/2/2013
5193 I sold two contracts at $18.40 backed by cash. On that cash if AAPL stays aboUncle Frank14/30/2013
5192<i>Sounds good in theory, but the seller should reserve $42,000 to back ukelseysuncle-4/6/2013
5191Sounds good in theory, but the seller should reserve $42,000 to back up each conUncle Frank-4/3/2013
5190Has anyone else noticed that AAPL put premiums for May $420 are over 4%? Promiskelseysuncle-4/2/2013
5189UAW VEBA trust argues exercise price is not fair, now, after Fiat made Chrysler Sr K-11/12/2012
5188<i>If you think AAPL goes down, you should have bought a put, not a call. shlurker-12/30/2011
5187AAPL has been around 382.xx On Friday, 11-nov-2011:10:00AM If you think AAPL gopekos-12/2/2011
5186ok - i don't know where to post this, but this thread was suggested. Any coshlurker-11/22/2011
5185yes exactly. i expect this market to see saw for quite a while, with the potentiValueGuy-7/21/2011
5184"I must admit that i tend not to use covered calls unless a stock I own hasBocor-7/21/2011
5183Yes, great article. I must admit that i tend not to use covered calls unless a sValueGuy-7/21/2011
5182Terrific article, and terrific comments. I do occasionally use covered calls to Bocor17/21/2011
5181dealmkr thanks for the advice...its crazy out there...just barely managed to keValueGuy-5/22/2011
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