Buy and Sell Signals, and Other Market Perspectives Message Board

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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives

SPY 684.83

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Dec 22 4:00 PM EST

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To: GROUND ZERO™ who wrote (21971)	7/24/2011 1:05:24 AM
From: KevinKT	Read Replies (3) of 220537

If AGQ goes down to 175 next month, and you write another 175 call for 8% You receive 8% for first month, i.e. 17.20. You paper loss if you sell AGQ for 175 at that time = 175 + 17.20 - 215 = 22.80. If you hold it, and sell for another 8% on 175 for second month and get 14.00 You income for 2 months is 17.20 + 14.00 = 31.20, which is 14.5% for 2 months. But if AGQ close above 175 after second month and is called away, your gain is 31.20 + 175 - 215 = - 8.80, You lose money. So one still need to be bullish on AGQ to write the calls.

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