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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: FaultLine who wrote (1718)8/1/2001 6:44:31 PM
From: Dan Duchardt  Read Replies (2) of 5205
 
FaultLine,

Another alternative besides selling puts ala Dr. Id's note is to roll forward your calls. There is little to be gained trading strike for strike, but selling the September 12.5 or 15 is not bad. It would cost you a net of about $3 to buy back your AUG10 and sell a SEP15, but you raise your upside potential by $5. If NTAP stays up around 15, that $3 will earn you $2 in about 6 weeks time. That's not bad. The situation will improve for doing that roll out if NTAP retreats from here, but it will cost you more if NTAP continues higher. There is virtually no time premium left in the AUG10, and the ATM SEP15 have as much time premium as they are likely to get.

Dan
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