How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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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 (5006)	9/25/1997 12:26:00 PM
From: jim clabaugh	of 14162

still studying RXSD. it's interesting that stk has declined since announcing the split. it's just starting to pull away from top BB now. i think there's an emotional fight going on between the oversold condition to pull stk down and the split announcement to drive stk up. anyway, here's my play. buy nov30pp @ .5 (protective put) sell nov40np @ 2-7/8 (naked put) net credit 2-3/8 buy nov40c @5-3/8 apply above credit - net cost 3 current stk @ 41-3/4...1-3/4 ITM therefore netnet time value cost 1-1/4 risk: if stk closes nov. between 30-40, you are put stk at 40. if stk below 30, you reach max risk since you have protective put @30. reward: if stk closes nov. above 41-1/4, you are starting to make money. of course, double number of shares and 1/2 your per share price based on split oct.23. therefore, risk between 15-20 and profit above 20-5/8 after split. cheers, jim.

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