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Technology Stocks : Oak Technology (OAKT)
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To: Bald Eagle who wrote (4036)5/6/1998 12:20:00 PM
From: AreWeThereYet  Read Replies (2) of 4335
 
If you write covered call then you are earning 0.5/share in the expense of flexibility for the 4 months period. You can't sell your OAKT until September or your calls will becomes nake (risky)! Since I don't believe OAKT will dip much lower, you can't buy back your calls for less than 0.5/shr + commission or you lose money on the calls. So what you did is that you lock in 0.5/shr profit but losing 4 months interest and liquidity of your investment in OAKT. You are also limit the upside potential to 25%. IMO "If you really think OAKT is going nowhere for several months, you should sell it and buy some other stocks!"

Thanks for you advice, actually your idea is good but this is just not my investment style.

aC
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