Calls and Puts for Income Message Board

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Strategies & Market Trends : Calls and Puts for Income

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To: Jerome who wrote (178)	4/14/2007 2:41:04 PM
From: Uncle Frank	Read Replies (1) of 5891

>> Actually the premiums can be generous. QCOM at 42.55 will net about 2.05 for the May 42.5's . Ah, yes, but that's an at-the-money strike price. I was basing my characterization on your earlier statement of technique: "My preference is to buy the stock at the low end of a well defined channel. And then immediately write a covered call at the next higher strike..." The next higher strike is the 45 May option, which is trading at $1.00, so if your qcom buy/write were exercised, you'd realize $2.45 from appreciation of the stock vs. $1.00 from the premium you collected on the call.

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