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Non-Tech : The Critical Investing Workshop
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To: Voltaire who wrote (7578)3/15/2000 4:59:00 PM
From: uel_Dave   of 35685
 
Voltaire and the other CC gurus If your calls are up that means stock is up and account is up. ; As you are aware I still have some CCs on QCOM. For Example in one account there are 20 CCs at an avg. cost of $15.5. I sold April 125s and the last transaction is $14.25 on CBOE ( bid $13.125 and ask $13.875 ). As per your statement above the call is up $1.00 from yesterday and the stock is up approx. $3.

In summary:

a) Received premium of $31,000 for CCs
b) Debt to account of $28,000 for CCs
c) Stock appreciation of 1/3 * $3 * 2000 shares = $2000

Therefore a net increase of $5000

Just a couple of quick questions:

1) If I buy back the CCs at $13 1/8 tomorrow, then would I receive the full appreciation of the stock ( Therefore: costs of calls ~$26k and the net is $5k, plus gain $4k more in stock appreciation ?? ) , but then I am still playing the casino without any hedging?
2)This CC strategy assumes forward positive movement, but not great movement ( i.e. NOK deal ) , mostly side ways for the April CCs to lose their time value, correct me if I am wrong.
3)This strategy allows you to put the premium to use, which I have with the July 140s, however is that always the case to sell CCs ATM for the next month and buy calls OTM for four months out or more or buy quality stocks during the a correction or do nothing and collect the money and then write more calls for the next month??

TIA,

David
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