To ALL on the thread:
time again to expose my bona fide ignorance. I have been a long-time lurker, and admirer of this forum. And occasional poster.
I was wondering if anyone could help me?
here is a scenario
PWAV is at 18.14 today
If, in theory, I BOT: PWAV FEB 02 5's for 13.80, and
SELL the SEP 20 calls for 1.45 . . . one could pick up nearly 10 1/2% on the transaction (not incl comm.'s)
plus an additional 1.20 if called out in september.
My first question is, should I be overly concerned re/ the very low open interest (only 2) if I am purely thinking, in this example, of using the FEB o2 call as a vehicle to generate premiums? Will I have problems later (due to liquidity, I guess you would call it) with such low open interest?
Secondly, am I better off with the FEB 7.50's instead? The lower cost of 11.50 makes a HIGHER percent return when you pay less on the same sale of the SEP 20's for 1.45, but I guess that is the trade-off(?) for the lower return potential if you do, in fact get CALLED OUT @ 20 bucks?
Is that what you have to look at? More of how much DOLLAR potential there is over PERCENT potential? ( plus the extra "juice" if called out? )
How do you all view such scenarios on covered calls?
And last, but not least, to certify my ignorance . . . do any of you use those cc calculators? Which are the best, and can any old DUMMY use 'em?
sincerely, the guy in the dunce cap
jaytee |
