Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 168.06

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3:59 PM EST

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To: Voltaire who wrote (46752)	10/31/1999 11:05:00 PM
From: MileHigh	Read Replies (2) of 152472

V, Unless I misunderstand, you are losing credibility when you say "everything is cool" when a stock skyrockets while one is covered. This is wrong. Specific example: (because I am thinking of doing it) 1. I sell the Nov230's for 10.50 2. The stock rockets to 250 after earnings due to great news, etc.. 3. My calls are now under water to the tune of around 9.50 (give or take some time premium and volatility premium) 4. Therefore, I can buy the calls back at around 20 or so. thus losing 9.50 on my covered call strategy 5. Sure, my common went up but I lost 9.50 on the shorted calls 6. Is this good when I could have just held the common w/o selling the calls?! The point a few are trying to make is that a covered call position can negate your returns on a runaway stock. AGREED?! I do agree, this is pretty basic and not too much to understand or argue about. Boo! MileHigh

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