KCMW: I'm convinced that you and also Mike, by the way (he's not posting right now but is around and about), have exceptional abilities in selecting what stocks to use for cc's and when to use them and when not to use them. I don't really know how you do it.
At the time I had that bad experience there wasn't even Internet trading. I had used a Discount Brokerage firm for many years and was friendly with some of the brokers. I'd been holding that stock for ages, and it was appreciating in growth but the broker suggested it might be a way to get some addiitonal money from just holding it. It was bad luck that I sold them then. I bought the calls back because I couldn't stand losing that stock. It was a real mess. Yes, you'd have let the stock go, taken the small profit and not looked back. For me it was painful.
The other risk is where the stock tanks. You got the 7% on the cc's but the stock went down a big percentage and you couldn't sell. Of course, that doesn't mean you would have sold if you could have. So often I just hold thinking a stock will come back and it doesn't. When you aren't free to sell it's easy to blame being trapped by the cc's, but maybe you would have had that loss anyway.
I like to feel free to sell, anyway, even if I'm too dumb to use that freedom advantageously.
Right now, with such limited funds, unless I'm buying a really cheapo stock I can't have a portfolio of shares on which to write cc's, but I'd still like to understand your methodology so when I build up my funds again I can seriously entertain doing that.
The only point I wanted to make to you is that your method isn't really risk-free. It's lower risk and you found ways to minimize it through using a portfolio of ten stocks which you carefully chose for their optimal benefits for cc writing, but there's still some risk there. As Tex points out, they won't go to zero, though, the way options can!
I got shot off my horse. So what? I'm up again. Mark Knopfler
