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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: rkf who wrote (6399)1/13/1998 11:35:00 PM
From: Greg Higgins  Read Replies (1) of 14162
 
rkf writes: I lost your strategy somewhere

Ok. I see from your followup message that you want to go to cash. I misinterpreted your phraseology in your earlier message.

Thanks for providing details of the trade, that makes it easier to explain my point, which was: You bought DELL at 81.50, sold the Jan 85s, and now the stock is at 89 11/16. Those options are likely to be exercised this Friday.

If you don't want to get assigned, however, you have the opportunity of buying back the Jan 85s for 5 1/4 and selling the Feb 85s for 8 3/8 (as of closing today). This gives you a net credit of 3 1/8, plus the opportunity for the stock to dip below 85 so that you could buy back the calls cheaper, which would be important if you wanted to keep the stock, which you don't .
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