Tyco International Limited (TYC) Message Board

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Non-Tech : Tyco International Limited (TYC)

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To: Richard James who wrote (643)	11/12/1999 1:12:00 PM
From: Chuzzlewit	Read Replies (1) of 3770

Richard, What you say makes little sense unless you got a bad quote on the price of the call or the calls were mispriced. When the price of the stock is greater than the striking price of the call the difference is the intrinsic value of the call. The difference between the price of the call and the intrinsic value of the call is the time value of the option. What you seem to be describing is a call with a negative time value. If you provide some exact numbers on the price of TYC when you sold the call and the price you obtained for the call perhaps and the striking price and expiration of the call I can cut through the confusion. You always achieve maximum profit on your covered call position when, at expiry, the price of the stock is equal to or greater than the striking price and will equal the striking price plus the premium received for the call less the cost of the stock. Your break-even point is the price of the stock when you sold the call less the premium you received for the call. But for intermediate time frames the implied volatility can vary depending on investors' views of the underlying issue. TTFN, CTC

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