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Non-Tech : Any info about Iomega (IOM)?
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To: Yikes who wrote (30408)9/19/1997 10:59:00 AM
From: Zebedee Wright, Jr.   of 58324
 
Yikes

In your previous scenario the option writer would only lose if the price of IOM drops below $21. $25 strike + $4 premium =$21 break even point. (assumming) $25 was the purchase price of IOM stock)

You then write the next months options and this will further reduce your break even price. Loss in the stock price is only a paper loss unless you sell the stock, or you have to meet a margin call.

Write the calls after the stock price rises and buy them back after the stock price retreats. This can be done hourly, daily, weekly, etc.

I have only had stock called once (in August) at the $22.5 strike. Received a $2 premium, stock called at $22.5. Bought them back (stock) the following Mon or Tues for $22. Shortly therafter sold the Sep 25's and bought them back and repeated the process again. Trying to close out the rest of my positions today.

Volatility is a stock option writers best friend (unless you have a dog)

Good Luck!

Zebedee
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