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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: alanballow who wrote (4542)	10/30/2006 12:59:26 PM
From: Bridge Player	of 5205

<<you may be obliged to buy at the strike price>> Right. <<meaning you anticipate those stocks trading above the strike price and therefore the options not exercised.>> Hopefully. <<< The net effect being you keep the premium.>> Yes, hopefully. << Because of the big difference between call and put premiums, I take it you think the calls are overpriced >> I don't know if they are or not, and really don't care. << , ie the stocks will not rise enough above the strike price to make it worthwhile. << If they do, that's fine with me. Or, they can just sit there. Since both stocks are currently trading above the strike price, and yet down some for the day (which means the put premium is higher than it was Friday), if they just sit there or even go down just a tad in the next 3 weeks, that's fine too. I still collect the premium. Worst case: I have to buy the stock. In both cases I like the stocks and feel they are reasonably priced to maybe undervalued some. So I wouldn't mind buying either, or both. And if assigned would promptly write Dec. same-strike calls against both. Basically, I'm just trying to pick up a little income, and perhaps buy some stock I like below current market. And btw: only one commission to pay if they expire. << Do I have that right?>> Sounds to me like you have it right :))

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