Some folks make a living by writing calls. Say you have one million dollar, and bought
10000 shares of CPQ with $350k in Jan, and sell 100 calls immediately on Feb $35 for $2
premium, then your income for Feb is $20000 (if the stock price held below $35 at the expiration. your return in one month is 5.7% in one month, and you can write call
everymonth, for 12 months in a year. If you pay special attention, you will see that it is after the option expiration the stock price start to jump to another level, and then float . The big boy is playing the game, hey not only make money from the rise of stock price , but also from selling calls. So, more than 70% chance that the stock price of CPQ will start to move,
especially for stock which had lots of institution holders. |
