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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Jon Tara who wrote (11169)7/7/1999 8:03:00 PM
From: NateC  Read Replies (1) of 14162
 
I am long the January 2001 LEAPS calls on Schwab....strike price split-adjusted 40.

and I have sold (am short) the August 47.5 calls.

The stock price is currently at 53....so I will be called away in August...if things should stay the same.

Question is:...What is the scenario if I should elect to do just that.?? Let's say the price goes on up to 60...and at that point my long leaps calls are worth, say, $30.

Does my broker (Ameritrade..who says they would call first...but I don't trust them) Call me and tell me that I have to come up with the desired # of shares of SCH to give to my CC buyer at $47.5. (So I could buy them at 60, and give them to him/her at $47.5.....instead of exercising my long Calls??)
OR

do I tell them to go ahead, sell my long Calls....Do they sell them at 60, the price at that time....essentially closing the spread? I am not a big "spreader"...so could some of you have have done CC's on long Leaps calls as stock substitutes.....go through this scenario for me? If SCH is a runaway between now and August Expiry....am I really shooting myself in the foot, (anymore than if I were simply long the underlying stock).....by not doing anything?? thanks for helping!

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