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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: FaultLine who started this subject5/11/2004 1:12:07 PM
From: wilywilly  Read Replies (1) of 5205
 
Is this free money or not:

After the merger of ADVP into CMX, the ADVP calls became CMX calls at the same strike price, but the deliverable is 193 CMX plus $701 cash for each contract, instead of 100 CMX.

But the premiums are HUGE - $30.30 bid for the JUN 40 (symbol ARZFH). Do I understand this correctly - that if I own 200 shares of CMX I can write 1 ARZFH, receive $3030 in cash, and if CMX doesn't break 40 by June 18 I keep the money? I understand that if it DOES get to $40, I'll essentially break even (have to pay back $701 and lose most of my CMX), but what are the odds?
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