Quote from hotwired:
[B.
I do like the idea of selling covered calls as well. The logic being, "yes, the risk is I don't get the upside, but my research tells me there's not much upside anyway because the market is entering high territory." This protects me on the downside by giving me some "free money" (sort of) but doesn't kill me on the upside too much because I can buy the stock or fund right back again...
This is one of the things that maybe I'm missing with selling covered calls...I hear about the risk of losing out if the position moves sharply higher, but I'm guessing the typical scenario is that the stock on which the call is written on is (for example) 10. It moves to 12, someone excercises teh call and takes your 12 stock. you buy it back at 13 maybe...that doesn't strke me as a HORRIBLE scenario. I am green however, and may be missing something! [/B]
