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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: FaultLine who started this subject5/30/2001 9:25:39 PM
From: JohnM  Read Replies (3) of 5205
 
I'm considering two kinds of covered call writes for tomorrow (Thursday) and would love to have any comment anyone wishes to offer.

The first is to buy back my June 15 NUFO options. You may recall I sold 2 contracts at $1.30 and bought NUFO at $14.03, both as a way to learn my way around covered call writing. Those contracts are priced at $.30 now, so I'm considering buying them back for a $1 gain. And selling the July 12.50s for $4.10 (all prices are this evening (Wednesday) from the CBOE website). NUFO closed today at $10.22.

The second is to begin experimenting with writing ccs against stock my wife and I own. I worried about doing so as long as I thought there were strong possibilities either the stocks or the Naz would move up precipitously. Boy, did that possibility disappear today.

So I'm looking at:
June NTAP 20s, premium $1.35 (stock closed at $19.01 today);
June JDSU 17.50s, premium $1.10 (stock closed at $16.94 today);
and/or SEBL June $45s at $3.00 premium (stock closed at $43.64 today).

My choice in each is to write close in out-of-the-money calls to get the larger premium but with some protection. My guess is that I don't run much risk of losing the shares but, since, again, I'm not writing a lot, yet; I can live with losing them. Will, in fact, just buy them right back.

Any thoughts?

John
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