You're kidding right?
Let say you had 2000 CS that popped yesterday, and so , during its run yesterday, you consider the move a bit much or would like to take advantageof the volatility in the stock. With the stock at 14 3/4, you decide to sell 20 July 17 1/2s for 3/4 or so (i don't recall what they were yesterday nor know what they are now).
So you sell 20 calls for 3/4, you pocket $1750 (figure 50, 60 bucks commissions) you net 1700...stock goes to 17 1/2 or above you'll get 17 1/2 plus 3/4 premium. but if the stock backs down you have 3/4 to go against your cost.
As to whether people really do it, most traders i know absolutely use options in position trading (forget day trading) and make the money selling calls and buying back if stock pulls back and then writing agian if stock moves igher....lets you trade option against stock with out haveing to give up stock.
You should spend some time getting to know options..forget going long the ones that are 25% out of the money with two weeks left, the cheapos, they are gambling, a suckers bet. The true options player uses them to hedge, to protect and to generate income.
Regards,
Steve |
