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Non-Tech : Any info about Iomega (IOM)?
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To: isdsms who wrote (35985)11/16/1997 5:02:00 PM
From: Gary Wisdom   of 58324
 
Re: Writing out of the money $ calls

Sorry, Ira, but there is no such thing as a sure thing.

Example:

You own 1000 shares of Iomega. Your cost is $24.
The current price is $29.
You write 10 Nov 35s. Let's say you sell them for $.50 each.

Scenario #1:

The stock drops to $20. You make $500 on the options and lose $9000 on the stock.

The stock rises to $40. You make another $6000 on the stock + $500 on the options, but leave $5000 on the table.

I do not think writing covered calls is bad. However, there is no such thing as a free lunch.

Good luck.
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