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Old 12-09-2004, 12:08 PM
RocketManJames RocketManJames is offline
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Join Date: Nov 2002
Posts: 118
Default Re: Advice when selling covered calls, in or out of the money?

[ QUOTE ]
benefit: you have choices when you sell the option... the money comes into your account immediately... yet you still OWN the stock... if the price of the stock falls, you can buy back those options, and then resell them for a profit again in the future... thus, effectively PRINTING money out of the stock.

[/ QUOTE ]

Uhhh...

First off, the only reason you were able to book such a "large" gain from selling the option is because the stock ran up over $15 from your purchase price.

Now, you say that if the stock drops you can buy back the options and do it again. If you sold the stock, you'd simply buy the stock back if it dropped. And, if the stock dropped, you'd be buying back the options with a time premium now attached to it (for those who are new to options, an option's time value is larger when it is near or at the money than when it is deep in the money). So, effectively, you've done WORSE than simply selling the stock. Not to mention higher transaction fees.

A big problem is that you're doing all this hand-waving about how you made so much from selling calls, but really... where did that profit come from? It wasn't from the calls... it was from a stock that ran up over $15 for you.

You have a serious lack of understanding. And, I can't wait until you get a few blind followers who are awestruck by your market prowess. Because, then you'll have set them up perfectly to sell the "Goode system" -- 3% monthly returns -- If you're not satisfied, don't worry, you'll have a 30-day risk free money back guarantee.

-RMJ
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