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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Dan Duchardt who wrote (3281)1/18/2002 10:08:42 AM
From: holland  Read Replies (2) of 5205
 
Time spreads with leaps and a call sold. I believe you should go several strikes in the money. This increases the delta and reduces the time value. You should not let the sold call be exercised, you should buy it back. The premise of a time spread is greater time decay in the sold call than in the purchased call. Example stock at $35. Buy a $25 leap and sell a $40 Call. Percentages work both ways, you gain a greater % and can loose a greater %. The end question is how much money can you make.
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