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: Herm who wrote (11589)	9/28/1999 6:12:00 PM
From: Dan Duchardt	Read Replies (2) of 14162

Herm, I'm disappointed in the price movement of the ROST calls. I bought Oct40s prior to the split at the ask price of 2_7/16 on a stock price dip below $40. Split adjusted, my basis for the Oct20s I now own is 1_7/32. The best quote I've seen since the split was 15/16 x 1_1/8 with ROST at 20 1/2. It seems to me that time erosion cannot account for the drop in the option price, which has gone down while the stock has gone up about 3% from where I bought. Could you comment on this situation? Is this a natural consequence of the split? Is the general decline of the market causing call option prices to fall faster than one would estimate based on deltas? TIA Dan

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