The Options Box Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Options Box

QQQ 616.28

+1.4%

Jan 21 4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: eric deaver who wrote (9477)	2/8/2001 1:23:44 PM
From: Poet	Read Replies (1) of 10876

Hi Eric, Long time no see. :) This means an "at the money" call, or a call whose strike is close to the current price of the stock. In JF3's example, NTAP is now trading at $35 1/2 The Feb 35 call (NULBG) is about $3 1/2 at the bid. He was thinking of buying NTAP shares and (I suggested) immediately selling calls against his shares (also known as writing covered calls) for $3 1/2. This reduces the cost of the stock to $31 1/2 per share, as he'd take in $ 3.50 per share in premium from selling the calls to someone else. If NTAP ends up being less than $35 per share at option expiry (next Friday), he keeps his shares and the premium he collected. If NTAP is above $35 at the close next Friday, his shares are called( automatically bought from him) at $35 per share. I hope this helps.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next