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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: mc who wrote (5689)11/3/1997 2:18:00 PM
From: mc  Read Replies (1) of 14162
 
Re: IOM - is anyone CCing? I need a little help.

Situation: Before earnings came out, I had some calls written and the stock would have been called away. For two reasons, I bought back the calls and wrote some in the money Feb 22 1/2 calls. I did this because I needed to push the sale (if I got called out) to next tax year and there were no January's available. The other reason was that I incorrectly anticipated a weaker than expected earnings report and thought I'd be able to buy my calls back.

Obviously, IOM reported good earnings and has been moving up. I now am short those deep in the money calls. The questions: Is IOM going to keep moving up? Should I buy back my calls at a loss (not too bad for tax purposes this late in the year) and roll up to a higher strike price? This would be expensive and obviously put some of my profits back on the table. Or should I just sit and wait it out, hoping for a dip to buy them back? I'm still uncertain as to their potential continued earnings increases due to cheaper faster competition coming on the market.

Any advice would be appreciated. I'm certainly not losing sleep over it since I'll pocket a 50% profit if i get called in February (nut = 15.02).

Thanks, Gary (who is really testing Herm's no lose money rule lately due to VVUS - ouch)
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