I don't have much to say except "Nice post". You i...

2009-04-16T04:16:00.000-07:00

I don't have much to say except "Nice post". You integrated the specific example with broader information on the topic nicely.

Thanks!

Hey DGI - I apologize - I accidentally posted this...

2009-04-09T11:01:00.000-07:00

Hey DGI - I apologize - I accidentally posted this on your "alternative strategy to covered calls" post - I meant to post here:

I agree with your general reservation about writing covered calls. Covered calls are great when a stock goes nowhere, but it doesn't protect you against big drops in the stock, and it forces you surrender too much capital appreciation if the stock makes a big move higher.

But writing covered calls below the original cost basis of your stock can easily backfire if the stock makes a strong rebound, and you're forced to sell at a much lower price than the current market price.

Most covered call writers trade exclusively for the income potential - stock ownership is incidental. But I advocate covered call writing for long term (dividend) investors as well.

The idea is to scale things back and write covered calls from a much more conservative perspective. I call it the 1/3 Covered Call strategy - you simply write out of the money calls on only a portion of your holdings.

This still produces income and it gives you far greater flexibility in case the stock moves significantly higher and you need to roll the calls out and up and not have to worry about being forced to sell your long term holdings.

If you squeeze out even an extra 5% a year with this strategy, the long term effects will be profound.

Comments on Dividend Growth Investor: Covered Call Options Strategy for cutting losses o...

I don't have much to say except "Nice post". You i...

Hey DGI - I apologize - I accidentally posted this...