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dogs nest ontario | Good points John, but the one issue is the timing of the sale of the underlying stock.
Yes the market can drop the value of your owned shares, but don't assume you have to sell them at the lower price.
You still own them, and can again sell calls against them. However this does suppress your profit potential, as the stock has a lower upper limit.
Another way of playing it is to sell puts against stock you don't own, but wouldn't mind owning at a lower price.
[eg; if you think Ford has a future, you could sell $6 puts against it until you are exercised, then buy Ford at $6. your net cost would be less, as you have collected the short put premium all along.]
The big difference between stock and commodities is that commodities have a time expiry, stock doesn't.
Selling covered calls in stock is a no-brainer, because if you are exercised, there are always other comparable stocks to buy.
corn is corn. Buy a corn future, and you have to dispose of it within a certain amount of time.
[when i have more time, i'll go off on my commodity put option tangent ]
Ed oout | |
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Well, someone had to take the other side.
