Has anyone analyzed covered call writing results?

Discussion in 'Options' started by Eliot Hosewater, May 18, 2006.

  1. I think most people doing buy-writes would sell further than the next month out. They might go out three or four months, so they would be taking in more premium. Also, they probably would not sit there and get assigned. They would either buy them back or roll them up.
     
    #11     May 18, 2006
  2. united46

    united46

    One of the recent editions of S&C had a study on results. If I can find it, I'll post the results.

    Cheers
     
    #12     May 18, 2006
  3. bvam1

    bvam1

    Have you considered only selling covered calls during the day, or last couple days, of expiration. Calls are so overpriced considering the fact that they will expire worthless very soon.

    If I do covered calls, I'd do something like this. But volitality has been much lowered now than it was a couple years ago and calls are much cheaper, which make this strategy somewhat less effective.
     
    #13     May 21, 2006
  4. gbos

    gbos

    Covered calls will not give you an inherent advantage in making money.

    If you already have a stock that you would like to keep for fundamental reasons, consider writing out of the money calls when the IV for the stock is at a relatively high level compared to the past and you think that the stock is currently overbought. Write calls with less than two months to expiry.

    If you don¢t own the stock the strategy of buying the stock and selling the call is equivalent to the strategy of selling a put with the same strike. So in that case spot a stock that you would like to own for fundamental reasons and wait for a market correction with a jump in IV. Sell OTM naked puts for the amount of stock that you want to own if assigned.

    Don¢t just randomly write options all of the time.
     
    #14     May 22, 2006