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Strategies & Market Trends : Calls and Puts for Income

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To: Jerome who wrote (992)	7/22/2007 12:51:20 PM
From: dealmakr	Read Replies (1) of 5891

Hi Jerome, Bank stocks usually aren't great candidates for me doing cc writing as my focus is in the smaller regional banking area and not the big money center banks. One stategy that I have used in the past on some of the larger issues has been to write a cc on a bank that is going ex-dividend in that cycle and look for the dividend capture as an added return. Look at WFC this month; Stock 34.72 WFC Aug 35 C WFCHG .65/.70 B/A Expected dividend .28 with ex date around first week of Aug. Return if called 1.21 including .65 sale of call,.28 increase in intrinsic value of underlying & .28 dividend capture. Also could be possibly improved by legging into position depending on market conditions. Not a suggestion to do it, but just an example of where a dividend expiration during an options cycle may give a bit better return at times. As far as the regionals, I trade mostly from a longer term timeframe or when the market throws the baby out with the bathwater, you can get some quick bargins.

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