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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Herm who wrote (4322)9/2/1997 5:50:00 PM
From: Douglas Webb   of 14162
 
UGLY closed 1/8 below its open, at $13. Down 7/8 from friday's close.

I covered my margin for today by selling 100 shares of INVN at a profit. I may write some calls tomorrow if I have to, but I'd rather not do that just yet.

You also recommended writing CC's on ugly: "CCing on Ugly must be over your net cost basis even if it means going out to the Dec. CCs since you are so close to your net cost basis."

My net cost is $15.44 right now, so do you mean that I should write $15 calls? The Dec 15 are at 1 1/16; they would only lower my net cost to $14.42. It would raise some cash, but it still leaves me in a deep hole, with options that I'm not likely to be able to buy back without a loss until December (unless UGLY _really_ crashes.)

To make the damage control more complex, I'm expecting another $1500 cash to hit my account by the end of the week. I just have to avoid margin calls until then. I think I'd rather do that by taking profits on INVN. Isn't selling 100 shares, and losing potential future profits on them, better than tying up 600 shares by selling what will likely become deep ITM calls? (I only owned 600 shares this morning, btw. If I had tens of thousands, I'm sure I could raise enough cash without tying up all of them. As it is, I think selling 100 was better, no?)

Thanks.
Doug.
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