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Technology Stocks : PairGain Technologies
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To: Jay Mowery who wrote (20825)2/20/1998 7:03:00 PM
From: porcupine --''''>  Read Replies (2) of 36349
 
PAIR covered call strategy:

cboe.pcquote.com

Note that the time premium on the Feb 20's has shrunk to zero on the
bid side, and is actually negative on the Feb 17.5's and Feb 15's.

Yet, there remains 1-1/8 points of time premium on the Mar 20's [(20 +
1-5/8) minus 20-1/2 = 1-1/8]. Thus, with only one month before
expiry, the implied one-month return on buying the stock at 20-9/16,
and writing the call at 1-5/8 is 1-1/8//20-9/16 = 5.5%. There's *got*
to be a way for the disciplined and patient Value Investor to make
money off of these kinds of odds.
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