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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Uncle Frank who wrote (4997)6/2/2009 10:26:10 AM
From: CrackheadBob   of 5205
 
If I have to buy the calls back, say in this scenario with the stock trading at $44.30 at $3.30 on expiry day, I plan to roll those out into the July $42.5. It will depend on the exact stock price and what the time premium is, but I think that I can probably get away with a trade there with a slight loss overall (or somewhere close to it).

To answer the second part of your question, what the chances are of QCOM seeing $41 at some point this summer....I have never thought of myself as smart enough with respect to where a stock price ends up or why. Every time I think I know where it is headed because of some piece of good news, etc, it seems to move the opposite of what I think. However, I think that the overall sentiment in the market now is fairly positive and that has always been a good time to write calls. I don't think that the market has seen the last of some significant downside moves so I think if I keep rolling this out and up, I will have an opportunity to have these calls expire worthless and still have a gain.

As I mentioned earlier, this is the most upside down I have ever been in a covered call trade and I thought I would take the opportunity to see if I can continually roll these as I have and pocket the time premium and eventually get out.

I will let you know how this next leg of my trade goes.
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