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

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To: Tom K. who wrote (12318)	2/6/2000 5:04:00 PM
From: Dan Duchardt	Read Replies (2) of 14162

Tom, 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). I think you have misinterpreted the numbers in Peter's question. Either that, or I have. The 4_1/4 loss is only half what he would have to put up to buy back his short puts. If he then sold the AUG45s I believe his net premium would be 4_1/4 - 8_1/2 + 5_7/8 = 1_5/8. Dan

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