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+Chapter 2: Covered Call Writing 
+A WORD OF CAUTION 
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+The stockholder who owns stock from a previous purchase and later contemplates 
+writing calls against that stock must be aware of his situation. He must realize and 
+accept the fact that he might lose his stock via assignment. If he is determined to 
+retain ownership of the stock, he may have to buy back the written option at a loss 
+should the underlying stock increase in price. In essence, he is limiting the stock's 
+upside potential. If a stockholder is going to be frustrated and disappointed when he 
+is not fully participating during a rally in his stock, he should not write a call in the 
+first place. Perhaps he could utilize the incremental return concept of covered writ­
+ing, a topic covered later in this chapter. 
+As stressed earlier, a covered writing strategy involves viewing the stock and 
+option as a total position. It is not a strategy wherein the investor is a stockholder who 
+also trades options against his stock position. If the stockholder is selling the calls 
+because he thinks the stock is going to decline in price and the call trade itself will be 
+profitable, he may be putting himself in a tenuous position. Thinking this way, he will 
+probably be satisfied only if he makes a profit on the call trade, regardless of the 
+unrealized result in the underlying stock. This sort of philosophy is contrary to a cov­
+ered writing strategy philosophy. Such an investor - he is really becoming a trader 
+should carefully review his motives for writing the call and anticipate his reaction if 
+the stock rises substantially in price after the call has been written. 
+In essence, writing calls against stock that you have no intention of selling is 
+tantamount to writing naked calls! If one is going to be extremely frustrated, perhaps 
+even experiencing sleepless nights, if his stock rises above the strike price of the call 
+that he has written, then he is experiencing trials and tribulations much as the writer 
+of a naked call would if the same stock move occurred. This is an unacceptable level 
+of emotional worry for a true covered writing strategist. 
+Think about it. If you have some very low-cost-basis stock that you don't really 
+want to sell, and then you sell covered calls against that stock, what do you wish will 
+happen? Most certainly you wish that the options will expire worthless (i.e., that the 
+stock won't get called away) - exactly what a naked writer wishes for. 
+The problems can be compounded if the stock rises, and one then decides to 
+roll these calls. Rather than spend a small debit to close out a losing position, an 
+investor may attempt to roll to more distant expiration months and higher strike 
+prices in order to keep bringing in credits. Eventually, he runs out of room as the 
+lower strikes disappear, and he has to either sell some stock or pay a big debit to buy 
+back the written calls. So, if the underlying stock continues to run higher, the writer 
+suffers emotional devastation as he attempts to "fight the market." There have been 
+some classic cases of Murphy's law whereby people have covered the calls at a big