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

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To: Herm who wrote (12963)	6/23/2000 7:18:00 PM
From: jaytee	Read Replies (1) of 14162

HERM: (or anyone else interested in helping this dummy) CAMP California Amp (good little company) closed today on upward momentum @ approx 35 (34 7/8) My daughter is interested in this one as a SPREAD? BUY LEAP JAN O1 25'S UMPAEfor 12 1/4 (37 1/4 "nut" not including comm. and 6 mo's to see it rise 2 points for breakeven . . more or less (*BUT THE OI IS ONLY "5") MY/OUR INTENT IS TO SELL THE OCT 21,2000 40'S WHICH APPEAR TO PAY 4 1/8 CC PREMIUM. ARE WE BETTER OFF DOING JAN O1 30'S UMPAF @ 9 5/8 (39 5/8 "NUT") and have the same 6 mo's but it has to rise to40'ish for A BREAKEVEN)(*BUT THE OI IS 103 ON THIS ONE) OBVIOUSLY THE "OVERHEAD IS LOWER ON THE JAN 01 25'S, SO WHAT GIVES? IS THERE SOMETHING OBVIOUS THAT I AM OVERLOOKING? WHY DOES THE "CROWD" WANT THE 30'S INSTEAD? I WOULD THINK, ASIDE FROM THE INITIAL OVERHEAD, I AM ALSO BETTER W/ THE 25'S (?) BECAUSE IF I HAVE TO SELL THEM TO CLOSE OUT/ AND BUY THEM TO GIVE TO MY COVERED CALL BUYER (IF I AM CALLED OUT) I HAVE A GREATER PROFIT HERE TOO (25 + 12.25= 37 1/4 FROM 40 (STRIKE PRICE) GIVES ME MORE "JUICE" HERE THAN IF I WERE TO GO W/ THE 30'S (3/8 JUICE) THANKS IN ADVANCE, JAYTEE

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