Covered Call Hype
- Thread starter Free Thinker
- Start date
Metoox, you are so right! Another thing is that in time you will be left with a portfolio of very worthless stocks that went south. I have left 4 such stocks in my account just to remind myself to leave this well alone. (CPN, SEI, PKD, PRTN) At a recent seminar when they were talking about protecting the stocks in your portfolio I asked How do you collar a $1.00 stock.
Metoox, I also have done the rolling down thing pretty much to no avail. However doing the same with calender spreads has worked quite well. The two stategies CCs and cal-sprds are some similar but when the far out month falls it can't go from $70 to $5 so the drop is much easier to make up. As for the drugs I was so burned that I finally decided puts were the only way and earlier this year they were. IMCL, BAX, SEPR to name a few.
I don't know about anyone else but what has hurt me the most in calenders is having them go ITM and then not being able to roll the short side. I am almost, I say almost, convinced to use put calenders in a rising market and stock and call calenders in a falling one. It seems much better to use the short to make up the decline in the long than vice versa. You can also turn it into a diagonal calender to help if you are careful. I had PPD fall from $29 to $18 or so earlier this year and still came out with a fair profit with the diagonal approach.LOL