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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: David L. Hoevener who wrote (12236)	1/23/2000 2:29:00 PM
From: NateC	Read Replies (2) of 14162

Herm & Group I have been doing the Long Leaps Call with short, short-term CC's for some time. Here's something that just happened to me....the Sunday morning call from Ameritrade I'd like your advice on this: I was long the SCH 40 strike LEAPS call Jan 2002 and short the January 37.5 CC.....which I watched all day long....it closed at 37 3/4...but Ameritrade told me by phone that they don't exercise unless the underlying equity is 3/4 point or more in the money (in this case, 38 1/4 or higher, which it WASN'T) I ended up with a short call position in SCH, getting exercised...basically meaning that I sold 2000 shares short on saturday....... the reason was that Ameritrade told me that they only exercise if the closing price is 3/4 point or more...above the strike price. SCH closed on the New York on Friday at 37 7/16 or 37 3/4.......depending on whose quote system you use. BUT....in afterhours trading......it went to 38 1/2 I believe.......maybe 38 3/8....but in any event Ameritrade called this AM....and i got assigned on all 2000 shares...selling them at 37 1/2 I think that possibly a smart specialist saw my 37 1/2 calls at the close...and saw them as low hanging fruit...and got someone buy higher, to "harvest" my CC's....probably I'm just paranoid.. MORE importantly...........I need to cover this short position now. I'm not a short seller...never did it before...so I'm a little nervous....knowing about short squeezes, etc. If SCH takes off Monday morning at the close....I could be out more and more as it advances until I get it sold and I know better than to buy at market at the open. so what would you advise: 1. Buy some Feb or March Upstrike calls at the open.....just to cover my ass? 2. I will have the realtime quotes and charting running of course at the open.........if it opens where it closed on Friday....just a little above 37 1/2....I'll just buy the whole 2000.......and be OK 3. Do you know anyway to find out how it's trading on the British exchange......that would help me.....and i think will determine whether it opens with a gap up or not (there was some weak news...by another brokerage....after the close on Friday....that last quarter's online brokerages did more business, especially in Europe) any advice would be GREAT and highly appreciated direct email is OK too......RCRUMLEY@UCI.EDU

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