Skip to main content
No. of Recommendations: 3
<<I'm assuming the stock will move and that the short calls will be exercised>>

So if the stock is called away, will you repurchase the stock and immediately sell calls against them? If your calls get exercised because the stock skyrockets, wouldn't you feel a bit hesitant to repurchase an overpriced stock?

I am trying to get a sense of how determined you are to repurchase stock and sell calls against it over and over again, regardless of what price the stock is trading at.

And if the stock falls, the calls aren't exercised but expire worthless, will you sell calls at a lower strike price hoping to recoup any loss?

Even if you are determined to repurchase stock and sell calls each and every month, the annualized figure you describe will be a pipe dream if the stock declines in value by more than you receive in option premium.

Jim
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.