SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : The Covered Calls for Dummies Thread
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Dan Duchardt who wrote (3154)12/19/2001 8:15:38 AM
From: Dominick  Read Replies (1) of 5205
 
Dan:

I guess this applies to covered calls before expiration whose stock is showing negative characteristics.

It would be a mistake to think if you buy a stock for $50 and sell a call for $2 and the break-even point is when the stock reaches $48. That's not always so because you have to buy the call back then sell the stock.

It is common for the stock price to fall faster than the call price. So when both are falling at different incremental rates, what are the two prices that equal break-even as they are dropping?

Not only that, what if you rolled the option over once or twice thus changing your per share cost basis. What are the two prices that would equal the new break-even price?

So I was looking for a program or spreadsheet that I could just plug the two prices in as they moved.

But guess what? Due to the miracle of a couple of glasses of wine, I was able to make a crude excel spreadsheet that accomplishes my goal.

Dominick
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News