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Non-Tech : Any info about Iomega (IOM)?
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To: Zebedee Wright, Jr. who wrote (30410)9/19/1997 11:29:00 AM
From: Yikes   of 58324
 
Zebedee,

>> 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) <<

Yes, yes, I stand corrected. $21 is the 'break-even' point. But the $25 mark is still the 'maximum profit' point because above it, the call option is likely to be called if it is not closed. Between $25 down to $21, the devaluation of the covering IOM shares is less than the $4 premium collected, but the overall profit decreases as IOM gets closer to $21. Below $21, option writer begin to lose money from the IOM shares covering the call options.

Yikes
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