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Subject:  Re: Covered Call Strategy Date:  12/17/2006  9:06 AM
Author:  JoKingMe Number:  7743 of 11335


I consider my IRA the 'pay me' portfolio and tend to have covered calls written on most of my holdings in those accounts.

Your initial trades on 11/3 generate 3% return if called in 15 days. This is a great return for a short period, but leaves you with another decision should the stock move up slightly. I require all my option position to be a minimum of 10% total return if called. I want to get paid for my decision making of finding a good stock. 3% just isn't enough commission, even if it is a short term trade.

I'd have done a Dec 55 on 11/3 and probably gotten $1.25 or better (22% AINC). I'd have made less than you in this situation, but I'd have known I was going to get my 10%+ if called away.

How much of your success was based on having the good fortune of ESV dropping from 53+ to just over 50 in order to allow you to close your initial 50 call to write the 55? How would this look had the stock been at $51 or 52 instead of back to $50?

I don't like buying a stock and hoping that it doesn't go up. I'd prefer to just hope it doesn't go up too fast in the short term, but if it does, I'm getting paid.

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