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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: RFH who wrote (8225)	8/20/1999 1:38:00 PM
From: OldAIMGuy	Read Replies (1) of 18928

Hi Rob, I'll have to compose some information on selling covered calls with AIM. Here's the quick version: - Wait until your cash reserves are close to fully funded - One CALL Contract is equal to 100 shares of the common. - If the market is getting near a peak (it would be if the cash reserve is fat) there's usually a nice premium for selling covered calls. - Remember that you will ONLY sell as many call contracts as AIM tells you to sell at that same price. If you own 1000 shares and AIM says to sell 100 at $25, then sell ONE contract for the $25 strike price. - Remember that commissions are high for option contracts. Usually it will cost you $40-$50 even if you are selling just one contract. - Because commissions are relatively high on options, be sure you are getting paid enough to justify the deal. I generally look for $1.50 minimum as the premium. That gives me the $0.40 for commissions and leaves me enough to go out for dinner! Best regards, Tom

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