ATMEL - w/o MB Message Board

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Technology Stocks : ATMEL - w/o MB

ATML 8.140

0.0%

Apr 12 5:00 PM EST

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To: eDollar.com who wrote (112)	9/21/1996 3:08:00 PM
From: hpeace	of 200

Chinmoy, If you sit down and do the math .You'll find out why I wanted you to find me books that said you didn't want alot of volitilty to write covered calls. say you write a aug 25 call for 3 and the stock runs so now the aug 25 is now worth 7. now let's make it's toward the expiration so you looked like you are trapped. You'll have to let it exercise and take 25 a share. Here's what you do and the volitilty helps this too. You buy back the aug 25's for 7 and you sell the oct 30's for 5.5 Now becasue of the volitity ..guess what the stock goes back to 28 and you buy back the oct 30's for 2 and sell the sept 27.5 for 2.5. what you described is a real issue. It does happen. But, I still made 2 points. ps. this is a real trade on atml that i had to do during the 25-32 run up over a month ago. pss. i agree that if you don't feel comfortable with this then stay with the flatter stocks. psss. "you couldn't find that book that said that you covered call non-voltiles stocks. .......could you???? anyway, get you calculator out and go through some examples like I outlined. It works... ..

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