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FreeMarkets

08/07/06 12:41 PM

#33093 RE: SyndicateTwo #33091

S2,

I looked at covered calls once, but it seems to have low profitability. Maybe you can set me straight. The 18% I mentioned is the best case scenario right? If you don't get them called from you then you actually had a lower percentage in that month than the 18% annual. The next month the best case is still the 18% annual going forward assuming the ratios stay the same. In other words, you get far less than 18% if the stock starts falling below the strike price. Sure, you get to lower your basis, but you still net a smaller return.

Does that make sense or am I missing something?

fm