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To: puzzlecraft who wrote (17916)	5/10/2000 8:24:00 AM
From: Voltaire	Read Replies (2) of 35685

Hi John, I am glad you ask your question because it shows what being covered in a stock can do in regards to not only providing income but more importantly protecting one better on a decline. With her $40,000 and using about $2,600 in margin, we purchased 500 shares of Elon at around $85. She has pulled out $8,000 to live on over that period. By being covered and by buying back the calls as they lost their intrinsic value and writing ATM calls along with writing calls on top of calls with even farther out premium as the stock declined, we have added another 500 shares. We now sit with 1,000 shares as opposed to the 500 and slightly over $23,000 in the account and holding 10 contracts on the May 45's. I have instructed her not to pull out but 10% of the net value for the next month. We can still jump out and write further out calls and increase her number of shares and leverage as I expect Elon to move quite rapidly when news comes. The mistake I see people making on covered calls is not buying back when there is no longer any intrinsic value left. With just time value left, the writer is no longer covered except for time erosion. Thanks again for your question, Voltaire

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