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: Jonathan Thomas who wrote (11418)	8/24/1999 5:56:00 PM
From: wbpfta	Read Replies (1) of 14162

Herm and Board: Protective Put choices for ORCL. Scenario: Earnings announcement date is Sep 15, 99. ACE is 0.16 EPS but whisper number is 0.32. This suggests that high expectations are built into the stock. Missing the whisper number would very likely send the stock tumbling down. Stock gapped up 25.12 to 32.90 in June 15/16 when earnings exceeded expectations. Since July, trading range is between about 32 to 39. iqc.com I own stock at 31.63. For the downside protection, I'm thinking of buying Sep30P at 7/16. However, expiry date is Sep 17, which is only 2 days after ORCL earnings announcement. For upside sideshow, thinking of buying Sep45C at 7/16. To pay for PP and upstrike call plus reduce NUT, will sell Jan45C at 2 1/4 Your comments/suggestions are most welcome. In particular would like to know if 2 days between earnings announcement and options expiry date means that the options are virtually worthless due to time decay. Also, how much would the stock price have to move before I recover the total investment of 7/8. (I estimate about 1 1/2)

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