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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: hivemind who wrote (929)	6/7/2001 3:41:23 AM
From: Dr. Id	Read Replies (2) of 5205

If you had bought SEBL and then sold DITM calls you would have about the same position as you described using short puts. Also, with the short puts I think you could buy treasuries for interest during the life of the play. I see these two things as 98% identical thoughts? Well, to buy SEBL at the point that I sold the puts would have cost me 43k (on margin). Selling deep in the money calls would not have pocketed me an additional 2.50 in premium (rather, it would pay me the difference between the strike price and the current price). If I sold out of the money calls, I might have been able to get the 2.50 premium but if not called away would be increasing my margin loan position (which I don't want to do right now). So I don't think that DITM calls are an equivalent position (unless I'm missing something, which is VERY possible). And yes, I could buy treasuries for interest during the life of the play if I wanted to (have never thought of that). However, given that I'm still on margin, I wouldn't do that... Dr.Id@thoughmarginkeepsgettingsmaller.pov

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