How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Dnorman who wrote (8524)	9/11/1998 1:35:00 PM
From: Douglas Webb	of 14162

I want to buy back some options that I sold, the stock is trading at 17 and the options were written for Oct 35. I want to take my profits the bid is 1/2 the ask is 1 1/8 with 770 contracts outstanding. Do I buy back at the bid or the ask? This MM wouldn't accept my bid of 7/16. That's a huge spread, especially for an option with a high open interest, and just a month away from expiration. Unfortunately, you have to pay the ask, not the bid. Marketmakers buy at the bid, and sell at the ask. The rest of us buy at the ask, and sell at the bid. Of course, if you put your order in between the bid and ask, you might get filled. But 7/16? You'd have to wait for a big price drop before the ask got that low. Doug.

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