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Non-Tech : The Critical Investing Workshop
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To: alias who wrote (5311)2/27/2000 12:13:00 PM
From: Voltaire  Read Replies (1) of 35685
 
You must remember the buyer of the calls also has profit in his calls that he sacrifices once he exercises. In other words he has not only the money he paid for the calls but also profit that he gives up in order to convert. Let's say that he purchased at the money when the stock was thirty five. The stock goes to $170 - $135 = call profit of around 85% of the $35 appreciation plus let's say the $13.50 he gave for calls.

So his real cost of the $170 stock - $135 + $13.50 + $29.75 in call appreciation or $178.25.

V

P.S. - Late this afternoon I want to take your situation and mtnlady's and show you how to create a short term capital loss while your account is appreciating and covered.

Selah
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