Best to sell an ATM, ITM or OTM covered call?

Quote from TheROTrader:

If youre long the stock and short an ITM call, where is the profit on that?
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Depends on how deep the call is obviously but your point is well taken and the call seller should plan on being assigned and not collecting any div is there is an X div day during the life of the option.
 
Quote from crgarcia:


I'll be selling covered calls on good dividend stocks for years.
I want to withdraw between 5-10% per year.
Of course, if stocks go down, my account will temporarily lose value, altough less than a long stock.
I can tolerate watching my account lose some value, as long as it generates income. [/B]
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The market was down what, 38% last year?
It's only temporary, eh?
 
spindr0---
The great irony of your comment is that the market being down 38% IS probably only TEMPORARY, but the losses to people's accounts, well, that's another story!!!
 
Quote from JohnGreen:

spindr0---
The great irony of your comment is that the market being down 38% IS probably only TEMPORARY, but the losses to people's accounts, well, that's another story!!!
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John,

The sad part about it is that the American people were sold a "Buy and Hold" bill of goods. Now many possess 201K plans.

Even worse, Fool Service Brokers have a fiduciary responsibility to invest wisely. Under the Prudent Man Rule, they are required to avoid speculative investments. So a "responsible" investment advisor puts you in Blue Chips.... perhaps the likes of BAC, C, GM, BSC, LEH. Yeh, 38% down might even seem modest to some.

OK, rant over :)
 
You guys are funny, has anyone else read the book "Wall Street Money Machine"? Its an oldie but a goodie. The book goes into great detail on the exact subject the guy that started this thread is talking about doing.

5-10% per month really isnt that hard, the hardest part is narrowing down the stocks that are going to produce good results. It takes a lot of time.

I sold my covered calls for the month on CIT (Struck12.8%-not struck32.53%), FITB (Struck6.98%-not struck8.2%) and ARNA (Struck23.80%-not struck25.72%) to make an average return of 14.25%-22.15% this month.

Check out investors.com (IBD homepage) and go to the "option center" page, scroll to the bottom and find "covered call writes". There are 4 option screens to use, I find most of my stocks on that list.

Good luck, dont let the "nay sayers" keep you from learning to use this effective technique.
 
Quote from burtonridr:

You guys are funny, has anyone else read the book "Wall Street Money Machine"? Its an oldie but a goodie. The book goes into great detail on the exact subject the guy that started this thread is talking about doing.

5-10% per month really isnt that hard, the hardest part is narrowing down the stocks that are going to produce good results. It takes a lot of time.
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WTH are you doing here, wasting your time on ET? At 5% a month, you're a rock star!

You need to get $100,000 from mommy and daddy's retirement fund and in 10 years you'll have nearly 35 million dollars from your Money Machine. 10% a month will get you closer to 10 billion in 10 years.

Go man! Times-a-wastin'
 
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