on options, another income producer using written calls
when with Dealer Babe in Lauderdale, when I wasnt panning the room for DoubleD's, searching the spare bedroom drawers for falsies, we discussed an idea of mine
sure, write calls to cover half your shares
but suppose you own (as I do) a scad of July calls
purchased them in February and early March
havent accumulated any more of them, since a scad is a scad
holding inmoney QCOM calls, July 140 and July 150 contracts
let's focus on July 145 for argument sake
here is the idea
sell nearby calls at a strike price likely to be just above the expiration date closing price
this would create a spread (both calendar and price)
so against the July 145, sell rights above 165 or 170
sell April 170 calls, in this argument
that would bring in 4-6 pts
if QCOM shoots north without bound, you got a minimum 25 pts gauranteed, but you must buy back in order to avoid having shares called away unintended
if QCOM falls short of 165 at expiry, then you bag the written spread call premium, yippie
after a successful resolution of such a spread written call, the process can be repeated with a May 165 or May 170 call
what do you think?
/ Jim Willie |
