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Strategies & Market Trends : The Options Box

QQQ 629.07

+0.5%

Oct 31 4:00 PM EDT

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To: Poet who started this subject	5/9/2001 1:17:39 PM
From: smchan	Read Replies (1) of 10876

Covered call question... Still looking around for my cc's to play. The underlying I'm considering is EMC. underlying 41.45 jun 40 (EMCFH) 5.20 jun 45 (EMCFI) 2.70 The jun 45 is a 9% premium (5.20 - (41.45-40) / 41.45) which is not bad; what I really like is the called premium of roughly 15% ((45-41.45)+2.70 / 41.45). From my little bit of DD, I'm fundamentally bullish on EMC (others do your own dd please) and would love to buy now and get called by July. First, is there an error in how I'm calculating called profit potential (in terms of percentages)? Should I focus only on current premiums, or is looking at premiums-if-called a valid, reasonably low-risk strategy? Thanks, Sam PS Meant to post this earlier when the stock was 39 and change (jun 40 was OTM) and the jun 40 and 45 premiums were slightly better.

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