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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (3138)12/14/2001 6:01:02 PM
From: Dan Duchardt  Read Replies (2) of 5205
 
uf,

Adjusted cost =5751-330+2820-1410 =6310

Did your calculator drop a digit?<ggg> Should that be 6831?

The return on the roll up could not be so much better in this case. It is a prefect example of why it does no good if you wait too long. The maximum % return on the roll up drops to 9.8%, with a huge increase in downside risk. The cost basis has gone up by $1410. There are probably better things to do with that $1410. One could buy 3 JAN20 puts for $105 and ensure that this position will make money.. no matter what happens. With any luck they could be purchased next week for under $100. Commissions of course have to be factored in. If the option fees are high, it might not be so attractive.

Dan
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