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Technology Stocks : The New QUALCOMM - Coming Into Buy Range
QCOM 178.63-1.3%3:59 PM EDT
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To: waitwatchwander who wrote (9096)6/18/2024 11:23:12 PM
From: Elroy1 Recommendation

Recommended By
Lance Bredvold

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When buying back your calls you want a low stock price. When selling new calls you want a high stock price.

Of course.

But if you buy back and sell new at the same time, you have the same stock price. It is neither high nor low.

You can of course buy back your short calls at a big loss, and wait, and hope the stock price goes up from the price it was at when you bought back your calls at a loss, and if it does then sell new calls for more than you paid a few days ago to buy back.

Sure, if everything works out you can do that, but if everything always worked out in stock trading we'd all be rich and retired.....

It seems to me Schwab is taking advantage of their clients with such offered transactions.

Schwab isn't a market maker in equity options. Are they? How would buying back short calls and selling newer longer dated calls AT THE SAME TIME be taking advantage of anyone? Who's the loser?

If I'm short a $20 Friday call on a stock that is today $22, and I can buy back the $20 Friday call, and sell the two months forward $22 call, and make a dime doing so........who's the fool?

I've switched an obligation (of mine) to sell the stock for $20 in a few days to an obligation to sell it for $22 in a few months. Whether that switch is a good or bad idea we're not going to know until the few months passes, but I don't see why anyone is taken advantage of if the short call holder decides to roll the call forward to a higher strike.
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