Covered Call Hype

Discussion in 'Options' started by Free Thinker, Nov 9, 2002.

  1. I bet you never wrote a portfolio of covered calls and puts for high premiums.

    The ones that rip will kill you ...
    #11     Nov 16, 2002
  2. Metoox, you are so right! Another thing is that in time you will be left with a portfolio of very worthless stocks that went south. I have left 4 such stocks in my account just to remind myself to leave this well alone. (CPN, SEI, PKD, PRTN) At a recent seminar when they were talking about protecting the stocks in your portfolio I asked How do you collar a $1.00 stock.
    #12     Nov 16, 2002
  3. I have had that problem; earn 15% in premium, stock tanks 20%, buy it back and roll down, earn 5% in premium, stock tanks 10%, and on, and on ...
    #13     Nov 16, 2002
  4. Drug stocks use to kill us; probably would work a lot better excluding that sector ...
    #14     Nov 16, 2002
  5. nitro


    Perhaps understanding FDA approval...?

    Looks like the Hospitals are a mine field now as well...

    #15     Nov 16, 2002
  6. Metoox, I also have done the rolling down thing pretty much to no avail. However doing the same with calender spreads has worked quite well. The two stategies CCs and cal-sprds are some similar but when the far out month falls it can't go from $70 to $5 so the drop is much easier to make up. As for the drugs I was so burned that I finally decided puts were the only way and earlier this year they were. IMCL, BAX, SEPR to name a few.
    #16     Nov 16, 2002
  7. I think the problem is betting on the outcome ...
    #17     Nov 16, 2002
  8. That works fine.

    I think we ate every drug stock in the US in the last 18 months ...
    #18     Nov 16, 2002
  9. The only way to do it is put a collar on it; but it reduces your return by two thirds or so.

    But it works ...
    #19     Nov 16, 2002
  10. I don't know about anyone else but what has hurt me the most in calenders is having them go ITM and then not being able to roll the short side. I am almost, I say almost, convinced to use put calenders in a rising market and stock and call calenders in a falling one. It seems much better to use the short to make up the decline in the long than vice versa. You can also turn it into a diagonal calender to help if you are careful. I had PPD fall from $29 to $18 or so earlier this year and still came out with a fair profit with the diagonal approach.LOL
    #20     Nov 16, 2002