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Technology Stocks : Oracle Corporation (ORCL)
ORCL 179.39+0.5%1:05 PM EST
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To: AnnieK who wrote (6575)3/26/1998 2:34:00 PM
From: DanZ  Read Replies (1) of 19080
 
Annie,

When you say 100 calls, do you mean 100 shares of stock or 100 contracts? Each option contract represents 100 shares of stock, so 100 contracts represents 10,000 shares of stock. Big difference.

Using your example, if you wrote 100 June 35 calls at 1 1/16, you would receive $10,650.00 less the commission. Writing covered calls can be a good strategy in a volatile stock as a way to produce income on a stock that you plan to hold anyway. Most options expire worthless. You can also buy the option back for a profit if the stock goes down and then write it again if it rallies. Or look at it this way: If you write the June calls, it's kind of like selling your stock at 36 1/16 today even though it's trading at 31 1/4.

Good luck,
Dan
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