Any info about Iomega (IOM)? Message Board

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Non-Tech : Any info about Iomega (IOM)?

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To: Rajendra KRISHNAN who wrote (30405)	9/19/1997 10:29:00 AM
From: Yikes	of 58324

Rajendra, Let me rephrase your scenario to make it clearer. When writing a IOM 25 call while IOM is at $27.5, the option is worth at least $2.5. So to the option writer, the writer will 'profit' from this option if IOM stays below 25 + $2.5+ (the premium). So if the option were written 3 months ago for $4, for example, the 'profit' point is $29. And your question was, whether this 'profit' point should be tracked. You should take your scenario a step further. The $29 above is only the 'minimum profit' point, the 'maximum profit' point is still $25. If IOM drops below $25, (covered) call writers will not be happy either because their IOM shares would lost value without having being reimbursed by the 25 call options. Given all this, then it is not difficult to see the 'best profit' point is $25. The option writers collect all the premiums without having to give up their covering IOM shares. Once the option expires, wait for an upsurge and write another batch of call options. Collecting time premiums as IOM rise steadily and slowly overtime is one additional source of income for being long on IOM. Yikes

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