Discussion in 'Options' started by stock777, Aug 1, 2007.
I'd say they are getting killed not making killing.
Yep, time for a killing, um-hmmm....
Covered call sellers ALWAYS make money on their calls.
It's the underlying stock that they have a problem with
volatility is the covered call writers best friend and VIX is at a 52 week high. Premium is rich so covered call strategies are bringing in good $$$. that doesn't mean they can keep pace with the market, however.
But my broker told me they were the most conservative option play.
Fat premium on a stock dropping is like using a bed sheet to catch an elephant. If a stock drops from $60 to $45 the $3.00 call you sold does reduce the sting a tad but the stock losses can still be significant.
The pump in the VIX is a case for having bought options already not sold them. The covered call crew is taking hits for the reasons already outlined. Those small premiums they took in may help a bit but the stock tanking is the real hit.
And on his honeymoon, he told his wife, "This won't hurt at all."
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