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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Dr. Id who wrote (4688)12/23/2006 3:02:58 PM
From: Carl Worth  Read Replies (1) of 5205
 
actually, if the stock closes between 37.50 and 40, you will have the stock put to you at 40, and called away at 37.50, so your profit will be $4100, not $6600

if the stock is below 40 (not 37.50), it will be put to you at a total cost of $33.40, not $34.40

if the stock is above 40, it will be called away from you at a gain of (6.60 - (share price - 37.50)), so you will make money as long as the price is below 44.10, not 46.60

as such, the best scenario is still a close between 37.50 and 40, just at a lower profit than suggested...your brackets for profitability are 33.40 to 44.10, which is 4.10 in either direction outside the odd spread you have created
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