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Strategies & Market Trends : Three Amigos Stock Thread
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To: Ken W who wrote (18590)2/3/2000 3:42:00 PM
From: Amigo Mike  Read Replies (2) of 29382
 
Hi Ken,

If you were expecting a sharp move higher in COMS you would not want to write the calls because your stock would be "called away" at $50 and you would not participate in the rally.

Ex:Write march 50s at say $10. Arnie would get the $10 premium but if the stock soars to $100 and the stock is called away ...... Arnie only gets $50 per share and his premium. If he buys the calls at $10 and the stock runs to $100 .... they are worth $40 a piece AND his stock is $100 a share if he wishes to sell. Huge 400% gain.

Amigo Mike
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