Well, the Microsoft example was using figures from a few days ago, if you want to call that “quantitative.” It isn’t too far off from $28 right now, and the April calls are still selling for around $0.60 (granted, it’s still a little more than a month away from expiring, since the expiration is on April 18). There are plenty of other stocks out there that can provide similar returns with covered calls. I you are in the curious situation of owning an overvalued stock, your risk is on the downside potential of the stock price, not from receiving a small premium on a call.

Well, the Microsoft example was using figures from a few days ago, if you want to call that “quantitative.” It isn’t too far off from $28 right now, and the April calls are still selling for around $0.60 (granted, it’s still a little more than a month away from expiring, since the expiration is on April 18). There are plenty of other stocks out there that can provide similar returns with covered calls. I you are in the curious situation of owning an overvalued stock, your risk is on the downside potential of the stock price, not from receiving a small premium on a call.

Well, it’s not really 75% if you take into account the margin requirement. What was the real return if you account for the margin requirement? I don’t like selling naked options because of the very high margin requirements. I prefer to use use vertical spreads to limit losses as well as reduce the margin requirements. Even if you use stop loss orders, if the stock makes a big after-market/pre-market move against you, the stop loss isn’t going to help when the options market opens and your short is way more expensive to buy back.

Well, it's not really 75% if you take into account the margin requirement. What was the real return if you account for the margin requirement? I don't like selling naked options because of the very high margin requirements. I prefer to use use vertical spreads to limit losses as well as reduce the margin requirements. Even if you use stop loss orders, if the stock makes a big after-market/pre-market move against you, the stop loss isn't going to help when the options market opens and your short is way more expensive to buy back.

stocks don’t move smoothly, and the distribution of movement over same-size intervals is manifestly not normal. unless you knowingly are the owner of a stock which is overvalued (a curious situation) there is considerable real risk which you take on for the small premium of a far-from-money covered call.

stocks don't move smoothly, and the distribution of movement over same-size intervals is manifestly not normal. unless you knowingly are the owner of a stock which is overvalued (a curious situation) there is considerable real risk which you take on for the small premium of a far-from-money covered call.

that’s like make dividends from stocks that you don’t even own!