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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (3529)3/19/2002 1:53:30 AM
From: FaultLine  Read Replies (2) of 5205
 
Hi Franq,

Thought I'd do a buy write on some QCOM this morning (Monday).

The "Q" is hanging around in the 41-43 area so I thought I'd give some APR 45 contracts a try.

Here's the tally sheet:

Opening Transactions
BOT n(100) QCOM @ 43.50 this AM
Sold to Open n AAWCH APR 45 contracts for 2.10/share

RISE and CALLED
(per contract before taxes and ignoring about $70 in overall comm)
Keep the sale profit.
Keep the 210.
(4500 - 4350) + 210 = 360
So 360/4350 => 8.3% ROI which is OK.

STABLE or RISE and NOT Called
Keep the 210.
210/4350 => 5% ROI.
Keep the stock and sell another round of calls.

FALL
Break even at 43.50 - 2.10 = 41.40 (my new Basis)
Keep the stock and sell another round of calls.

Really FALL
Nice weather we're having today don't you think... :o)

--dfl@pickingupdimesandquarters.com
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