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<p>[QUOTE=&quot;benveniste, post: 2248070, member: 25547&quot;]When you write a covered call, you are selling your upside potential to someone else while still bearing the risk of the asset going down in price.&nbsp; There&#039;s also an opportunity cost; unless you&#039;re willing to expose yourself to the potentially unlimited loss potential of a naked call you can&#039;t sell the underlying asset to buy something else.</p><p><br /></p><p>A covered call can make sense for income generation, especially on something where you are long-term bullish but don&#039;t expect much short-term movement. Without transaction costs, options would be a zero-sum game, which means in real life they are a negative expectation game.&nbsp; So unless you need the income from the premium now or are trying to adjust your overall cost basis, you&#039;re probably speculating rather than investing.&nbsp; There&#039;s another term for speculating at negative expectation -- gambling.</p><p><br /></p><p>Lots of people, myself included, enjoy gambling.&nbsp; In your case you are betting that GDX will become less volatile than the volatility implied in the price of the option.&nbsp; I offer no opinion on that bet, but it might be worth looking at the chart for VXGDX before making further options-based trades.[/QUOTE]</p><p><br /></p>

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