Covered Calls

[BoneFishGA]

Hey Bird,
I noticed in your profile you like covered calls.
Do you buy, sell them, or both?
What kind of options strategies do you like?

[Alchemist]

bumping this up for Bird. Bird, where are you? Leth, you are also into options...

[Leth]

my option strategy is so simple its boring. when my price hits a higher high of a certain N number of days...i buy a six month call......when it hits a lower low of a certain N number of days....i buy a six month put. i dont set profit targets...but i do get out and switch positions at the reversal when my systems tells me to. i buy one and two year leaps on my longer term systems.
i dont know anything about covers..spreads...naked puts..and all that stuff. that requires to much analysis for my simple brain.

[TheBirdLives]

Originally Posted by BoneFishGA

Hey Bird,
I noticed in your profile you like covered calls.
Do you buy, sell them, or both?
What kind of options strategies do you like?

Hi BoneFish,

My basic theme is the "vanilla" covered call. That is:

Buy the stock
Sell a near-the-money call for the next month.

This has the effect of setting an exit price equal to the strike price plus the premium. The ideal version of this would be:

• Buy at $40;
• Sell a call with a strike price of $45 for $1;
• If call is exercised, you made 15% in a month.

The best possible outcome, for the covered call writer, is to have the stock price at $44.95 at expiry.
You then have $1 in realized gains, $4.95 in unrealized gains, and can make the same trade for the next month — this time with a $50 strike.

Of course, life rarely provides the "best possible outcome." There are many variations on this theme, depending on what the stock price actually does.

BTW: There were a couple of submarines named "BoneFish". Any connection?

[TheBirdLives]

Originally Posted by Alchemist

bumping this up for Bird. Bird, where are you? Leth, you are also into options...

AlChem,

Tried to post a reply to this post yesterday, but lost the connection to the server.
Did you have a problem yesterday, or was that just me?

[TheBirdLives]

Originally Posted by Leth

my option strategy is so simple its boring. when my price hits a higher high of a certain N number of days...i buy a six month call......when it hits a lower low of a certain N number of days....i buy a six month put. i dont set profit targets...but i do get out and switch positions at the reversal when my systems tells me to. i buy one and two year leaps on my longer term systems.
i dont know anything about covers..spreads...naked puts..and all that stuff. that requires to much analysis for my simple brain.

Just goes to show how trades are made. Except for the time frame, I'd be on the other side of your trades. The interesting thing is that we can both win.

A key difference, I think, is that I will own the underlying stock. That gives me a different set of incentives.

When a stock I own hits a new high I will be looking to:

• Sell a call, assuming I haven't sold it before. [I don't sell naked calls.]
• Buy a put, to lock in a gain.
• Do both.

At a new high, calls are usually at their max price and puts are at their minimum.

When a stock heads down, I will do the following in order:

1. Buy back the call;
2. Sell the stock at my stop-loss target;
3. Sell the put, if I was able to buy one at an earlier high.

If I am doing this when the stock hits a new low, I waited too long.

[Alchemist]

Hi Bird,

today the server has been down for 1 hour. There might have been some down time yesterday as well. Time to get a dedicated server.....

[TheBirdLives]

Originally Posted by TheBirdLives

AlChem,

Tried to post a reply to this post yesterday, but lost the connection to the server.
Did you have a problem yesterday, or was that just me?

Got locked out again today.
There may be a pattern.

Each time:

• I hit quote to reply to a post;
• previewed my reply;
• posted my reply;
• saw an error I had missed on the preview and edited my reply.
• When I saved the edit, the edit screen did not go away.
• I could go to Home, reenter the thread, and see my edited post was there.
• When I tried to reply to another post, I could not submit my reply. The "loading" icon went round and round.
• I closed the forum tab and could not open a new tab to the forum for some time.

The obvious "quick fix" for me is to stop editing posts I have submitted.
My experience may have been total coincidence.
On the other hand, my actions may have led to a site crash. If so, sorry about that, but it should not have happened.

Anyway, hope this helps.

[TheBirdLives]

Forgot to include that I am running
Firefox 2.0.0.11
Windows XP Media Center Edition ver2002 SP2

[TheBirdLives]

Originally Posted by Alchemist

Hi Bird,

today the server has been down for 1 hour. There might have been some down time yesterday as well. Time to get a dedicated server.....

You got that right, AlChem. The trading environment is just too "real time" for your forum to survive an hour down in the middle of the day.

FWIW: I have no problem with your posting ads on this site. Ya gotta pay the bills somehow. If you can keep posting by the Pump&Dumps and the Spammers to a minimum, I think you have a winner.

Have a good weekend