Comments on: Deep-In-The-Money Covered Calls: How to Lower Your Investment Costs and Your Risk http://www.investmentu.com/2009/July/deep-in-the-money.html Investment Advice and Investment Research with a Contrarian Point of View Thu, 09 Feb 2012 16:06:49 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Burt http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-131927 Burt Fri, 12 Aug 2011 11:31:18 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-131927 It would have been nicer if you had explained how one might lose money selling DITM covered calls. The lesson doesn't help that much without examining the flip side. It would have been nicer if you had explained how one might lose money selling DITM covered calls. The lesson doesn’t help that much without examining the flip side.

]]> By: Options Trade | Smart Cap Alert http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-94164 Options Trade | Smart Cap Alert Fri, 11 Feb 2011 20:35:34 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-94164 [...] deep-in-the-money calls against your [...] [...] deep-in-the-money calls against your [...]

]]> By: MikeS http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-75532 MikeS Tue, 19 Oct 2010 00:35:46 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-75532 There is a good covered call screener to help find deep in-the-money calls here: http://www.borntosell.com It will alert you to earnings releases before expiration, and ex-div dates before expiration, as well as many other features. Great time saver... There is a good covered call screener to help find deep in-the-money calls here:
http://www.borntosell.com
It will alert you to earnings releases before expiration, and ex-div dates before expiration, as well as many other features. Great time saver…

]]> By: JS http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-60322 JS Fri, 16 Jul 2010 02:28:39 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-60322 Why wait for the stock to goto 0. have stop loss in place and by the call back for less than what you pd for. So u can't lose all your money Why wait for the stock to goto 0. have stop loss in place and by the call back for less than what you pd for. So u can’t lose all your money

]]> By: chung hae kim http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-31067 chung hae kim Sun, 06 Dec 2009 22:31:22 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-31067 I do ahve same problem with covered call strategy when strike price is $10.00 plus above the strike price. Is married put may be better strategy? I need your thoghts on this strategy. Thanks. chung hae kim. I do ahve same problem with covered call strategy when strike price is $10.00 plus above the strike price. Is married put may be better strategy? I need your thoghts on this strategy. Thanks. chung hae kim.

]]> By: Norman Edmead http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-28091 Norman Edmead Sun, 25 Oct 2009 20:03:07 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-28091 To use 7.75 as basis is an error in paragraph below. I can show you by my example: I buy stock for $10 and sell a $10 call for $5. If closes above expiration my total return is $15 a share which is 50% profit because I use $10 as my basis. Your way is to use $5 as basis ($10 cost minus $5 option premium) which gives 100% profit. It is obvious that I made 50% and not 100% profit. "If Yamana closes above $9 at expiration, you’ll make 16%. You arrive at this number in this way…$9 (strike price) minus $7.75 (cost) = $1.25 (profit).$1.25 divided by $7.75 = 16%.If the stock moves higher, your returns are capped at 16%, regardless of where it goes." To use 7.75 as basis is an error in paragraph below. I can show you by my example: I buy stock for $10 and sell a $10 call for $5. If closes above expiration my total return is $15 a share which is 50% profit because I use $10 as my basis. Your way is to use $5 as basis ($10 cost minus $5 option premium) which gives 100% profit. It is obvious that I made 50% and not 100% profit.

“If Yamana closes above $9 at expiration, you’ll make 16%. You arrive at this number in this way…$9 (strike price) minus $7.75 (cost) = $1.25 (profit).$1.25 divided by $7.75 = 16%.If the stock moves higher, your returns are capped at 16%, regardless of where it goes.”

]]> By: Michael Comeau http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-21677 Michael Comeau Sat, 29 Aug 2009 19:07:05 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-21677 I used to be a fan of covered calls but I've abandoned the strategy - I've left thousands and thousands of dollars on the table this year because I sold calls against stocks that skyrocketed. As for that fat premium on Yamana - it's because there's a high degree of uncertainty with the stock. It's not a giveaway - you're getting a modest reduction in downside risk for a large elimination of upside return potential. http://www.longshorttrader.com/2009/08/i-hate-covered-calls.html I used to be a fan of covered calls but I’ve abandoned the strategy – I’ve left thousands and thousands of dollars on the table this year because I sold calls against stocks that skyrocketed.

As for that fat premium on Yamana – it’s because there’s a high degree of uncertainty with the stock. It’s not a giveaway – you’re getting a modest reduction in downside risk for a large elimination of upside return potential.

http://www.longshorttrader.com/2009/08/i-hate-covered-calls.html

]]> By: LEAPS - An Introduction http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-19081 LEAPS - An Introduction Wed, 12 Aug 2009 21:11:47 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-19081 [...] on a number of options principles and the many ways investors can profitably use them. With “Deep-In-The-Money Covered Calls” investors can lower their investment costs and their risk. And earlier this week, Karim [...] [...] on a number of options principles and the many ways investors can profitably use them. With “Deep-In-The-Money Covered Calls” investors can lower their investment costs and their risk. And earlier this week, Karim [...]

]]> By: Options Investing: Readers’ Questions Answered | Jutia Group http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-19036 Options Investing: Readers’ Questions Answered | Jutia Group Wed, 12 Aug 2009 14:19:27 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-19036 [...] “Please explain the benefits of buying deep-in-the-money options.” [...] [...] “Please explain the benefits of buying deep-in-the-money options.” [...]

]]> By: Options Investing http://www.investmentu.com/2009/July/deep-in-the-money.html#comment-18683 Options Investing Mon, 10 Aug 2009 14:39:01 +0000 http://www.investmentu.com/IUEL/2009/July/deep-in-the-money.html#comment-18683 [...] “Please explain the benefits of buying deep-in-the-money options.” [...] [...] “Please explain the benefits of buying deep-in-the-money options.” [...]

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