Good morning garnett50,
Welcome aboard and thanks for the compliments. As time permits, try reading the first several hundred posts -- the ones from April and May -- those dealt with everyone's burning issues.
Now for your questions:
1.) why are options listed at CBOE usually 2.50 to 5.00 apart? Is there a way to sell a call at an in-between strike price?
Listed option exchanges have standardized the terms of options contracts: type (put/call), underlying stock name, expiration date, and strike (or striking) price. The strike prices are generally 5 points apart for stocks under $50 per share, 10 points apart up to $200 per share, and 20 points above $200. These rules have some play, many more volatile stocks will have 5 point steps even above $50 and many lower-priced or volatile issues will have 2.5 point increments. To my knowledge there is no mechanism for selling/buying at any price not listed although stock option trading programs will normalize the strike prices between stocks to force the same internals by calculating synthetic strike prices for the sake of uniformity in comparison.
2.) most of the stocks discussed here are tech stocks, particularly QCOM, (which is very puzzling since most people I know lost their shirts on it last year.....)Question though is this: why not have a GE, or IBM, or At&T as your underlying? is it too boring to own those, or is it the lack of volatility which reduces the premium and chases folks toward hi-tech issues?
Good question. For the past two years I've generally been interested in what we call the Gorilla and King-type stocks. Uncle Frank and I were discussing how the increasing number of covered call discussions on the G&K boards (i.e. NTAP, SEBL, QCOM, CREE, CSCO, and several others) seemed "off topic" to many posters on these threads. As these stocks have bumped along in various trading ranges for the past several quarters, many of the LTB&H stockholders have become interested in using their (often substantial) positions to generate monthly income by writing covered calls. UF suggested that a tech-stock thread catering to this group of discussants would serve a useful function, a prediction which has proven to be well founded. Thus you can see why the discussions have gravitated toward these particular companies.
Well, I've outlined the background -- now perhaps someone else would like to make comments about the some of the specific reasons we do or do not hold/discuss particular stocks. Again, welcome, and I hope you bookmark us for your daily consideration.
Cheers,
--ken/dfl |
