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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Uncle Frank who wrote (4581)	11/27/2006 5:37:47 AM
From: Hepps	Read Replies (1) of 5205

It looks like I'll be taking my plunge into Covered Call selling in my ROTH with the July 07 MSFT 32.50 Currently, stock is selling for 29.70 If I sell the 32.50 call at .95; If the stock is dead money, my annualized Rate of Return, 5.95 Plus 1.2 for the dividend is a 7%+ return. If I get called, annualized rate of return is 20.77%. Risk is obviously a sharp downdraft, but since I'm working with shares of MSFT I'm comfortable with this possibility.I haven't factored in interest or commissions. I'm not confident that they won't get called away, but then making 21% on top of the run they've recently had isn't a bad thing either. I'll sell covered puts on weakness for a covered strangle, but right now I don't want to tie up the cash on such a low rate of return for a stock who's price I don't consider that attractive. Hepps

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