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http://boards.fool.com/ray-you-make-some-very-good-points-pretty-much-25898824.aspx
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| Subject: Re: Covered Calls | Date: 9/13/2007 6:57 PM | |
| Author: billjam | Number: 59180 of 88047 | |
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Ray, you make some very good points. Pretty much sums up why I never bothered with CC. But CCs make good commissions with little risk for the brokers. I recently asked Fidelity to approve my account to buy calls and puts. Specifically at the time I wanted to buy 10 Jan calls on a stock that rumor said could go bankrupt. I knew the company and felt the conventional wisdom was dead wrong, but I wanted to limit my risk of a sudden price drop by buying the calls for $2,750. I figured if they did announce bankruptcy the stock would crash through any stop loss I might put on and my loss on a long position of 1000 shares would be several thousand $. I was right in my analysis. Within the week the calls were worth over $6K. Unfortunately Fidelity refused to approve me and I never made the trade. But Fidelity approved me for CC even though I don't want to use them. |
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