Writing covered calls
adamw at FreeBSD.org
Fri Feb 13 05:34:51 PST 2004
>> (02.13.2004 @ 0756 PST): Earl Smith said, in 1.1K: <<
> I found a stock selling for 42.76 - this stock looks to be on the rise.
> The April 42.50 call last sold for 2.55. If I buy the stock for 4276 and
> sell the option for 255, my cost basis in the stock is 4021. If the option
> is exercised, it seems to me that I have 229 minus commissions. I think I
> recognize some of the potential shortcomings for this strategy - the stock
> might not rise enough for the option to be exercised, or the stock might
> fall, in which case I wouldn't be called; the stock might rise enough for
> me to have made more money buying the stock and selling it at a profit; I
> might not be able to find a buyer for the option.
> Are there some other pitfalls that I don't see?
> Earl Smith
> t_esmith at hotmail.com
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>> end of "Writing covered calls" from Earl Smith <<
You should invest in MC Hammer pants. Those things are due to become
super popular any day now.
adam at vectors.cx // adamw at FreeBSD.org // adamw at magnesium.net
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