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Technology Stocks : Qualcomm Incorporated (QCOM)
QCOM 175.25+0.6%Dec 19 9:30 AM EST
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To: James C. Mc Gowan who wrote (46628)10/30/1999 3:40:00 PM
From: Voltaire  Read Replies (2) of 152472
 
Afternoon James,

yes, you pretty well have it down. I would like to make one comment. There seems to be an excess of fear about being Called Out when people write calls and I feel it is unjustified. Yes, certainly you will be called out if your Call is in the money on Expirations Friday but rarely before then. I have written Calls for years and been called out only one time before Expirations Day. I would say 95% of the Call buyers are simply playing the Call in and of itself and have no interest in picking up the stock.

As I said in my earlier post, hell I really don't care what the stock does up to the price I receive for my calls.

1. If the stock skyrockets, so what, you did not sell the stock so you are not looking at a short term Capital Gain on the stock itself.

2. If because of this rise you are forced to pay more for the Call than you received, the difference in the amount is a short term Capital Loss which will help offset the gain. In the meantime your portfolio has increased in value and in most cases your net result will be to the plus side. The best part is that you are covered for that little unknown intervening variable that could cause the stock to dive. For me, it is just a no-brainer, and we all know that pretty well fits me.

3. Rarely will an in the money Call out pace or even move Lock-Step with the price of a stock.

In closing let me just the reason I write Calls for my Clients is because we all sleep better at earnings time.

Hope this helps,

Thanks,

Voltaire
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