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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Kevin who wrote (1446)3/21/1997 4:04:00 PM
From: John M. Hammer   of 14162
 
Non-expert opinion follows:

Kevin,

You can buy back your calls right now while the stock is at 41 3/4. They'll probably be a little more than you got for them when you sold them, but since you are going to immediately sell the stock, and it is way above your cost basis, you still make good money.

Alternatively, you can hold the stock and leave the calls, but purchase some puts. 3 Jul 35 puts should be less than 2 each, so you will still get to keep some of the money you made by selling the calls. If the stock really tanks you can always buy back the calls (should be real cheap, 1/8 or 1/16) and exercise the puts, protecting you from losing all your profit.

With the puts, you can also just sell the puts when they become more valuable and sit on the stock, selling more calls after expiration in July - or after buying back the nearly-worthless calls you sold earlier, if you don't want to wait.

Best wishes,
John
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