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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: pranadude who wrote (13118)8/7/2000 10:34:41 PM
From: Herm  Read Replies (2) of 14162
 
Hello Richard,

I was trying to do a position analysis using The Options
Toolbox with your example. Using a starting date of today
the numbers don't work out so neatly. Yes, spreads are a
much safer investment. Limited risk and limited profit per
spread.

1. A March call today would mean a stock price of $43 7/8s
to pick up a March 30 call @ 15 between the intrinsic
value and the time value.
2. At the current stock price of $43 7/8s the short March
50 strike would be selling around 3. So, in order to get
7.5 for that call would require a new stock price of
around $52 1/4.
3. The length of time for this to occur would require a
fairly low float turnover (TRO) stock to jump 20% before
November. In other words, a viper!

Thanks for the question and food for thought....
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