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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Uncle Frank who wrote (285)	4/27/2001 4:31:13 PM
From: Uncle Frank	Read Replies (2) of 5205

Dale, yesterday you wrote: With SEBL at 44.11 the May 50s are selling for 2.30. I responded: I think it is very possible that we could see sebl back in the 50s in the near term, and I've delayed writing April cc's for that reason. But you got me thinking, which is when I'm the biggest danger to myself <lol>. Siebel gapped up over 10% today, and when I saw SGWEJ (April 50s) trading at $2.50, I couldn't resist and covered. There are only 3 weeks left until expiry, and I still have the feeling that the market won't run away from me. But even if it does, the math is very much in my favor. I purchased these shares 40 on 4/24, and if they called on 5/17 at 50, I will realize a return of Fixed cost method: (50-40+2.5)/40 = 31.25% Reduced cost method: (50-{40-2.5})/(40-2.5) = 33.33% Either way you look at it, a potential $12.50 gain in a few weeks, and a good deal. duf

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