HISTORY OF PROFITS WITH COVERED CALLS Message Board

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Strategies & Market Trends : HISTORY OF PROFITS WITH COVERED CALLS

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To: Paul Vinarub who wrote (10)	11/26/1997 7:08:00 PM
From: Marty	of 11

Vin-Man, We are on the same side of the table and I agree philosophically with your position... it is only a question of degree. I checked the math on PSIX the way I look at them and I pretty much agree with your math except I have today's close at 6 3/4 and the premium as 1/4. I used the average between the last price and above the current call bid and assumed you could get the higher price. But, the bottom line is that you are only getting $25 per 100 and that isn't much downside coverage if it goes down. You are also giving up a lot of upside and maybe able to make more if you guess the right direction by just buying on margin (or even buying a call for $25). Everything works out if it goes up but you are obligating yourself to hold for 3 weeks for a minimal amount. I agree with you on you points on diversification and so on but I think it works better with higher premium farther out of the money calls.

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