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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Andrew N. Cothran who wrote (3051)11/19/2001 10:57:29 AM
From: Andrew N. Cothran  Read Replies (2) of 5205
 
Final report on the QCOM Nov 60's.

I shorted 20 contracts Friday morning at 60 cents. I watched the stock close at $60.08. I could have bought the contracts back during the final 20 minutes for anywhere from 20 cents to 40 cents but I decided to let them ride, hoping that the stock would close at $60 or lower. But the stock closed at $60.08.

Result: Of the 20 open contracts, 15 were exercised. Why only 15 I do not know. But 1500 shares of QCOM left my account on Sunday at $60.00. I bought them back on the open this morning at $60.24.

So, after commissions, I gained:

$300 from the 5 contracts not exercised.
$900 from the 15 contracts exercised for a total of $1200 less $30 commission or $1170.

So, I gained $1170 from the sale of the options.

I bought back the 1500 shares at $60.24. So I 'lost' $360 on this transaction (Called away at 60 and bought back at 60.24 for a difference of -360.) Commission on the buy back was $14.95.

So here are the final figures.

Profit of $1200 less $30 commission is $1170
Loss of $360 less 14.95 commission is -$374.95

Total gain on the transactions is 795.05.

Not enough to justify all of the required adjustments and the mental activity. But, on the other hand, I guess it amounted to about $100 per hour for my time.

What I don't understand is why only 15 of the 20 contracts were exercised. Why would someone leave the other 5 contracts on the table?
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