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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: hpeace who wrote (1409)3/20/1997 1:50:00 AM
From: paul ross   of 14162
 
Steve;
In your last account, you didn't buy puts when
stock went up, why?
Also, math on transaction:
sale of 27.5 calls= 1-.19=.81; .81x15000=12150
potential profit of 25 calls: 1.125x15000=16875
So total is 12150+16875=29025, where does 22k
figure come from.
Also, in buying the put first, if the stock
has reached a resistance level and you feel it will
sell off to maybe its next support, why not buy a
put at that level, wait for the stock to come down
and then buy stock and upstrike calls.In my mind
this would be a safer approach, you only risk price
of cheap puts rather than price of stock declining
from what appears to be a base consolidation level.
Where's the error in that thinking?
Paul Ross
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