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Strategies & Market Trends : Covered Calls
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To: Herm who wrote (29)5/9/1998 11:43:00 AM
From: tchphysics  Read Replies (2) of 86
 
Herm,

I may have nailed the stock pick, but unfortunately, I took the premium bait too quickly and sold the June 12.5's on the same day I bought the stock.

I got 1 15/16 for the option, which gives me a 21.4% return if called, which of course now looks likely. Had I simply bought the stock and not sold options, I would be sitting on a 35% gain right now; however, that did not seem like a highly likely event when I bought the stock.

Any recommendations of what to do now. I checked to see what it would cost me to buy the options back and the time premium is still nearly all there...no erosion yet. If I were to buy back the calls now and immediately sell the stock, I would only net an 8.5% return.

Advice? It seems to me to be worth it to hang onto the stock now and collect the additional 13% gain by waiting an additional 41 days.

I think I need to just be happy with this write that gave me plenty of premium and wait to collect the rest of my money and stop looking back.

Jeff
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