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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Jon Khymn who wrote (4211)	4/16/2004 10:46:30 AM
From: DiB	Read Replies (1) of 5205

>Second, if RMBS drops to 15 by 3rd week of May, then I would sell June 15 Call NOT June 25 call. (Of course, if RMBS is at $15, June 25 will be more like 10 cents or so. But don't you think June 15 call to be at least one dollar?) Sure, and then in June RMBS goes up 2 bucks and at expiration you will get called out at a huge loss, unless you roll over prior to expiration... or before expiration one day the call buyer just decides to exercise his calls and get your shares for 15 bucks, and there is nothing you can do about it. Being "called out" has little or nothing to do with buying stock on margin (one of your previous posts), and has everything to do with selling calls against your current position. You might want to study options trading a bit deeper before doing actual trades... jmho.

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