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Strategies & Market Trends : Option Trades

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To: zx who wrote (917)	3/26/1998 8:32:00 AM
From: NIng Zhao	Read Replies (1) of 2341

I sold two naked Amazon.com October 60 calls. The way I figured it, I was going to short two hundred shares of the stocks, and selling the call seems much more attractive. True, my maximum gain is $30, but I am happy with that because I captured some premium as well. In addition, I also get to earn interest on the $6000 premium, which I won't if I had shorted the shares. Furthermore, there is no way that I am going to hold the short till October anyways, so the time constraint doesn't really affect me. Could someone tell me what are some potential pitfalls of this strategy? Thanks

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