Dr. Kris'  Instablog

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Dr. Ken Comments (28)
 
You say that a "steadily rising market is a perfect environment" for covered call writing. I would suggest that it is a perfect environment for leaving your long equity positions uncovered. A range-bound market is the perfect environment for covered calls. But I'm sure that's what you meant.
28 Dec 2010, 04:36 PM Reply Like

nasdaqczar Comments (57)
 
Ken you-re chatting with someone who has zer0 positions zip nada zilch no money where her mouth is this is the crazy lady who said XOMA was no good well they sure showed her eat your heart out XOMA has a big corporate partnership no one should listen to her or post on any of her bs posts lol ken she says you don't know what you-re talking about with the calls shes the one trick pony with bad advice and columns eom
5 Jan 2011, 10:55 AM Reply Like

Dr. Kris Comments (230)
 
No, I did mean what I said. A rangebound stock, not the market, is great for writing covered calls. During a rangebound market, some stocks go up and some go down.

During a steadily rising bull market, most stocks go up (approx. 70%). The object for many investors in writing covered calls is to actually *want* to be called out, and the returns on investment (ROI) that I give reflect that. On the other hand, if you think your stock will significantly outperform the market, then of course writing a call would not be aligned with your thesis.

The upside to covered calls is that you gain some downside protection thereby reducing position risk as well as generating immediate cash but, as you mentioned, your upside potential is limited. With options, there's always a price!

But I'm sure that's what you meant.

Dr. K
28 Dec 2010, 08:25 PM Reply Like

Dr. Ken Comments (28)
 
Nasdaqczar: Instead of "re-commenting", I wrote an article that I hope will be of some use - on covered call strategies and what they have done historically (Dec 30th):

seekingalpha.com/artic...
6 Jan 2011, 07:24 AM Reply Like

nasdaqczar Comments (57)
 
Keep up the good work Dr.Ken! useful info
6 Jan 2011, 01:53 PM Reply Like

Dr. Kris Comments (230)
 
Nasdaqczar,

I have no idea why you keep slamming me for using XOMA as a cautionary example of what a one-trick biotech can do to a person's portfolio. I clearly stated in my article (seekingalpha.com/artic...) that this was a real-life example of how putting all of your eggs into one basket can be physically as well as financially detrimental. It not only financially ruined a friend of mine, he was forced to quit his job as a broker because he recommended it to all of his clients.and subsequently ended up in the hospital with a nervous breakdown.

This happened in the early 1990's and the company has come a long way since then. If you had taken the time to at least read the article, you would have discovered that.

Why don't you post your own articles and stop slamming the honest work of others? Oh, that's right--you don't because you can't. Clearly, it's impossible for you to put together a coherent sentence.

Dr. Kris
6 Jan 2011, 05:13 PM Reply Like