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Technology Stocks : Cisco Systems, Inc. (CSCO)
CSCO 76.00-3.0%3:32 PM EST
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To: Elroy who wrote (74360)11/1/2007 8:21:14 AM
From: RetiredNow  Read Replies (2) of 77400
 
I've never sold or bought options, because it's riskier than playing blackjack at the casinos, but let me see if I have this straight.

You sold a covered call, which means you sold someone the option to purchase Cisco at some price. It's covered, which means you own the underlying stock. If the stock price goes up, they will call you on that option, which means you have to either buy the stock to sell it to them at the call price or you have to give up your stock to sell them at the call price.

Either way, you lose money if the stock price goes up, unless the buyer of the covered call you sold fails to exercise their option before the expiration date. Thus, when you said that you were a Cisco bear with your last call sale, you were not kidding. You meant that literally.

So did I get it right or am I missing something?
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