How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Night Writer who wrote (11307)	7/30/1999 1:24:00 AM
From: Hectorite	Read Replies (2) of 14162

Here's a theory on those JAN 40/45. Looks like bull spread to me. Sell the 45, buy the 40s. Take a 5pt credit. If the stock stays in the doghouse, you break even (actually better because you had the 50K in a money market for 6 months. Max profit with stock > 45, incremental over 40. Is it rational to be that bullish? Well it was 50 last january, so its certainly possible. I'm thinking, hell, why not? If you have a mind to park cash why not do it in a manner that has a least a possibility of paying off handsomely. I've never heard of this strategy before, probably because its not easy to get the full 5 pt credit on the spread as this guy did (well, actually 4 15/16 in this case).

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