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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: BDR who wrote (348)	5/3/2001 5:42:58 PM
From: FaultLine	of 5205

Executed a buy/write on SEBL JUN 47.50's today. I do not mind being called on this position. The only expectation I have is that, at expiration, the price will be above my break even and most likely about $46 although the upside above the strike is not important. Commissions are 3 cents per share and 8.00 per contract and are not in the calculations shown here. Bought SEBL @ 46.14 Sold SEBL JUN 47.50 Calls @ 5.00 (ALL Time Premium <g>) NetInvestment = 46.14 - 5.00 = 41.14 StockGainAtStrike = 47.50 - 46.14 = 1.36 MaxReturn = 5.00 + 1.36 = 6.36 Days = Expiry - Today =44 MaxReturnPerDayPerContract = 100(6.36 / 44) = 14.60 MaxReturnOnInvestment= 6.36 / 41.14 = 15.46% ( good, it's > 10%/mo) BreakEven = 46.14 - 5.00 = 41.14 DownsideProtection% = 5.00 / 46.14 = 10.9% (good) --fl

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