[MooreBonds]

Quote:

Originally Posted by Beachbumz Thanks for the well thought-out response.

Well, it's more of a stream-of-consciousness thing. Sometimes it makes sense, sometimes it doesn't. Chaos theory is a thing of beauty

Quote:

Originally Posted by Beachbumz Also, in practice, I'm only writing puts a month to 45 days out, so my example of 10% price drop was not fair (just trying to keep it simple).

Not to be nosey , but about how many option contracts are you talking about? My broker charges $29 min per option trade (up to 10 contracts)...you can't get too much cheaper than that, so by the time you subtract commissions, you'll be needing at least 5 contracts for it to be worthwile...

Quote:

Originally Posted by Beachbumz I don't use margin at all, and I don't recommend it. The funds are available to purchase the stock, in fact I WANT to purchase the stocks. My reserve funds for this are held at Interactive Brokers in 3 month bonds that are yielding 7.6% (only available to accredited investors and not insured), so the funds issue is not a problem for me, but it could be for others. BTW, my MM is yielding 2.5%.

Why...margin is what makes it....EXCITING!!!

Ummmm....those 7.6% 3 month bonds: are they anything like the securities offered by American Business Financial Services that declared bankruptcy a short while back? (you know, the firm that advertises those 10% 1-year notes in your local Sunday paper, and once you get on their mailing list, they send you 2 mailings PER WEEK). I don't know if I would be putting my 'reserve funds' for option calls in unsecred, junk, Z-class subordinated debentures....

Quote:

Originally Posted by Beachbumz The main part of the plan is in owning the stocks, paying an average of 4% and writing covered calls to pick up another 1-3% return. There are definately pros and cons to this kind of strategy, but it seems pretty good to me.

Sounds like an excellent strategy Beachbum. My only concern is that I've already loaded up a bunch of money into DRIPs (utilities, financials, REITS), and being the extremely conserative person I am (politcally, morally, fiscally, behaviorally), I tend to prefer most of my assets in higher yielding bonds/preferred stock, rather than REITS or equities yielding 2-4% less (I know, earnings and divvies grow over time...just give me a little time to come around and see the light).

So, my only problem would be having enough moolah allocated to keep buying common stocks if I time it completely wrong and keep getting my puts exercised.