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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: PoetTrader who wrote (3201)1/1/2002 10:40:13 PM
From: BDR  Read Replies (1) of 5205
 
"...wondering if I could pick your brain for your sage advice in picking up some leaps for Haliburton."

PMFJI (and with the caveat that my brain isn't as worth picking as Dan's), but after looking at the LEAPS on HAL I may take a small position in the Jan '04 10 calls for 5.90 and sell the Feb 15 calls for .80 (closing bid/ask Monday). With no change in the stock the LEAPS should hold their value and the calls would return about 13.5% (.80/5.90). Obviously, the main risk is further erosion in the price of the stock. With any improvement in price of the stock the yield would be even better. If not forced to close out the LEAPS by a rapid rise in price, several rounds of call writing could get the cost of the LEAPS effectively down to a neglible amount making it easier to sit back and see how this plays out.
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