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Sorry I dont have time to fully reply to everything that has been stated due to options expiry today, however most of the things you are saying here are correct. I will add a few ways i maximise my returns from the strategy. Also covered calls are not the ultimate strategy i do also use bull puts, bear puts bull calls credit calls, callendar spreads, butterfly spreads, condors, and many other strategies. It just depends on the opportunity presented.


1. To avoid your price being more than 10% away you can do a couple of things. In volatile markets i buy protection a fair way away from my strike. effectively turning it into a wide pull put spread with far less contracts.


2. Roll early. dont wait for the trade to turn to crap before rolling a possition out and down. This means a stock must fall far further before you run into trouble. You can also roll out a few months at a time to achieve a lower strike.


3. Fortescue metals is trading at $10.63 after undergoing a stock split. It would be one of the strongest rallying stocks in the large cap end. Definately hasnt suffered a large pull back from $60 to $8


4. Covered calls do not suite every stock and are not always effective in every market. However look at OXR, LGL, BHP,RIO, or any other range bound highly volatile stock for that matter. These have been absolute fantastic.


5. Everyone seems to be concerned about capping your upside and stopping a portfolio from every really making any money. Why not use the calls to pick the peaks and sell a call only when you believe the stock is over valued and is likely to pull back. You dont have to sell a call every month if the stock is rallying.


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