Re: Why dont value investors write more covered calls?
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But if you buy KO at $60 thinking it's worth $90, you need to write calls at $90.
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No you don't, you should write them short term at $65 or $70 and gain all the time and volatility premium. Reasoning is that if you thought the stock would go to $90 quickly you wouldn't have bought the stock in the first place, just the calls.
I wrote coverd calls on MSFT for a bit over two years till I sold it all recently. The calls were all short term OOTM (one month after the prior ones expired) I ended up paying for the entire position in the stock with the premiums.
Jimbo
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