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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: alanrs who wrote (1494)	7/15/2001 3:52:57 PM
From: Mathemagician	of 5205

Something to think about... Buy 1 NTAP = -11.67 Sell 1 Jan-03 15 Call = +4.4 Sell 1 Jan-03 10 Put = +3.6 Deposit cash to cover put = -10 (Worst case scenario ;) ) Capital Committed = -13.67 Premium Collected = 8 Breakeven = 6.835 Downside Protection = -41.4% (Annualized -27.4%) Upside Breakeven = 19.63 Upside Participation = 68.3% (Annualized 45.1%) ROI if stock closes at 11.67 = 58.5% (Annualized 38.7%) ROI if stock closes above 15 = 82.9% (Annualized 54.8%) All figures are before tax and transactions for consistency. Equity gains, if any, are long term. The premium is short term. Taxes are payable April 15, 2004, unless you alter the position earlier. :) As always BE SURE YOU ARE COMFORTABLE OWNING 2 BLOCKS OF NTAP WITH A COST BASIS OF 6.835 ON JAN 17, 2003 BEFORE EVEN CONSIDERING THIS POSITION! Oh, yeah, my calculations might also be way off so check them first. dM

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