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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: JGoren who wrote (1226)	6/26/2001 11:43:21 PM
From: RP Svoboda	of 5205

JGoren, It is late and I am not sure of the exact terminology but I understand the principals. . . <<how does one write "against" Leaps?>> I bought the Jan 04 50s at an average cost basis of $25.09. As long as I sell covered calls for a total (strike plus premium) of greater than $75.09 then the trade is profitable (including commission). Lets say for example my near term 80s expired worthless or I bought them back at a cheaper price than I sold them for - then I receive the profit. If the stock moves above 80 then it gets "called" in the form of a same day substitution and I receive the cash difference between the long position (50) and the short position (80) for a net profit of 30 minus the cost to originally purchase the position (25.09). Does this make sense? Boda

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