This is good, really good, this is a great thread...
I've never seen this many caring people in any other thread.
I sincerely thank all of you who chipped in to help me out my new CC experiment.
Now back to drawing board...
I don't fully understand your point but I think you are concerned...
when after RMBS hit 15 and I write June 15 then,
RMBS goes back to 17 then I get "called out"
Fisrt of all what's a "called out"?
If the stock price goes up after I write a call,
My net position should be same, no?
My net profit will be fixed at $1(assuming I wrote June $15 call at $1)
Stock price goes up $2, then option will go up $2
so I'm not any worse off if stock price goes up.
(Actually option price will not go up by $2, but less amount)
I started off this real bad, just my luck...
This is what happened so far.
I bought RMBS at $28.49
Sold May 30 calls at 1.75
coved May 30 C at <.75>
Sold May 25 C at 2.25
My RMBS cost is about $25.37 as of today.(details at the bottom)
1. So if RMBS closes at $25 on May 21, I'll be just about break even.
2. If the stock goes up (even if it goes to $100), I'll still break even, no gain.
3. If the stock goes down to $20, I'm losing $5/share (But this is instead of losing $8.50)
The good news is I've reduced some of my loses since RMBS tanked as soon as I bought the stock.
The Bad news is I have no gain potential at this point until May option expires...
CC TESTING DATE SHARES PRICE TOTAL COMM. TOTAL COST
RMBS STKS 14-Apr 500 $28.49 $14,245.00 $10.00 $14,255.00
May 30 C 14-Apr -500 1.75 $(875.00) $19.00 $(856.00)
May 30 C 16-Apr 500 0.75 $375.00 $18.00 $393.00
May 25 C 16-Apr -500 2.25 $(1,125.00) $19.00 $(1,106.00)
Curernt Stock cost * * * * * $12,686.00
Stock basis / share * * * * * $25.37
Current RMBS price * * * * * $25.30
Net gain (loss)/Share * * * * * $(0.07)
Regards,
Jon |
