remember what pal(paul) says...."the crumbs
add up"....
yes indeed, even when the original move did not quite work out.
here is an example:
7/14/00 sold 32 puts ATML Jul/37 1/2 at 1: collect $ 3,200
stock was at 40 1/2, hoping in one week to keep the crumbs, and worst case get assignment at 36 1/2 net ( 37 1/2 minus 1).
7/21/00 ATML closed at 35 7/8: bought back 24 contracts at 1 5/8 for a total $ 3,900 and will take assignment of 800 shares of ATML at 37 1/2.
7/21/00 Sold 24 contracts of ATML Aug/35 at 2 13/16 for a total $ 6,750. Note that the strike price has been reduced.
Next week will sell covered call on that 800 shares of ATML Aug 37 1/2 at 2 3/4 to collect $ 2,200.
What does it mean?
The 800 shares assigned at 37 1/2 have a cost basis of 36 1/2 and would be reduced 2 3/4 further by covered call to make it 33 3/4.
The 24 contracts mean we are willing to buy ATML at 32 3/16 (strike price 35 minus 2 13/16).
ATML has declared 2 for 1 stock split, and semi conductor sector has been under pressure this week despite stellar earnings from ATML, AMD, Intel etc.
This week which has been rough on chips has forced me to take losses on the previous puts sold, but by rolling into August, we collect more premium, AND, we declare the loss to the IRS.
Yes those crumbs adds up. Do this repeatedly and we get a meal. No ten bagger or triple in a week approach, but steady and get good sleep at night.
Paul |
