How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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

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To: PeterCS who wrote (12314)	2/5/2000 10:08:00 PM
From: Tom K.	Read Replies (1) of 14162

...I would like some opinions on the following if I could.... Peter, you asked for an opinion, here's what I would do based on what I perceive is your belief in the underlying stock (if you don't believe in the stock, then get out and don't look back and don't ever sell on one you don't believe in). Buy the PUT back for the 4 1/4 loss and sell the August 45 for 5 7/8. This will give you more time for the stock to recover, will lower your risk by 5 points, and will add an additional 1 5/8 (5 7/8-4 1/4) to your premium income for a total of 5 7/8 (orig 4 1/4+ additional 1 5/8). You are also price protected on the stock down to 39 1/8 (45 - 5 7/8). With the stock currently at 42, this seems pretty safe. If the stock recovers during this period as you think it will, close out the position when it is profitable. If it languishes 'til August, roll down again for more premium again lowering your risk point. The downside of this approach is the time it takes, but for me, I hate to lose money so I'll wait them out with this process. Good luck. Tom

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