RE: Covered Call OptionsMACK10 that article link you posted was DATED JULY 2, 2007!!! and I don't see the point of the article.
Not to get into a lengthy debate here... but you are saying I am risking too much capital and that if the stock declines I will lose ...only if I sell !!!... will I lock in a loss forever ....I am not selling... why would I????.
And I am not being taken out, or assigned at a loss either!!!
I have in point of fact sold the contracts so IF I get assigned... taken out... I do make a profit. IF I don't get taken out and the stock price is below the contract price so what... I still keep the premium I earned months before and now I can turn around and sell another forward contract at a price greater... then what I bought it for... all over again...!!!
Mean while- because I hold the stock all during that contract period I get to collect the DIVIDEND even while its under contract...what the H*** could be nicer...and I am putting too much capital at risk...!!!! only if you think this CANADIAN CHARTERED BANK is going belly up...not bloody likely!
I have no intentions of selling CM or BMO for a very long time. Do you really think that BMO and CM are forever going to stay at these present stock prices!!!!
You still haven't shown me the error in my plan....yes I could just buy and sell contracts never actually hold the stock or tie up that much capital ....but you get no margin with that method or Dividends.
And you could loss the cost of the premium only ...not much risk for possibly a very nice return. I have done that in the past to with some success.
However, I still feel better owning the stock...I am happy to own a couple of CANADIAN CHARTERED BANKS...I am not worried at all and if the price goes down to the Mid March levels so be it ...like I said I am hold back some ammo to buy more at those prices if need be.
Everyone has their own methods ...I am only suggesting one I think can work... use it..don't use it ...I didn't invent it...and it won't hurt my feelings if you don't.
Cheers