How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Caroline who wrote (7568)	6/9/1998 7:11:00 PM
From: Herm	Read Replies (4) of 14162

Hi Caroline, Thanks for your opinion on IFMX. Here is some food for thought using $7.25 as the net cost basis and 500 shares. By replacing 5 IFMX LEAPs instead of the stock itself would increase the profit potential even more! Here are the IFMX CALL option prices for straight CCing. cboe.pcquote.com Otherwise, here are some of the CC option spreads which are close to no brainers (almost impossible) to not make a profit before the CC expiration date! Once you enter into this spread you would wait for the stock price to move up and cash out by covering your short position (the CCs) and cash out the profitable long CALLs to pay the difference! Since the long CALLs have a lower strike price it will easily cover your expense and produce a profit with very little of your own cash. Owning LEAPs is much cheaper than stock! The rate of return is unreal! Series Long Short Entry Credit Total Gain AUG98 Call Buy 5 @ 7.5 Sell 10 @ 10.0 ($156.00) $2469.00 Outperforms Stock Ownership in price range: $8.44 - $12.19 NOV98 Call Buy 5 @ 10.0 Sell 10 @ 12.5 ($156.50) $3718.50 Outperforms Stock Ownership in price range: $10.81 - $14.69 NOV98 Call Buy 5 @ 7.5 Sell 10 @ 10.0 ($187.50) $2437.50 Outperforms Stock Ownership in price range: $9.12 - $12.12 NOV98 Call Buy 5 @ 5.0 Sell 10 @ 7.5 ($125.00) $1250.00 Outperforms Stock Ownership in price range: $8.00 - $9.75 JAN99 Call Buy 5 @ 15.0 Sell 10 @ 20.0 ($94.00) $8781.00 Outperforms Stock Ownership in price range: $15.44 - $24.81 JAN99 Call Buy 5 @ 7.5 Sell 10 @ 10.0 ($31.00) $2594.00 Outperforms Stock Ownership in price range: $9.44 - $12.44 JAN99 Call Buy 5 @ 5.0 Sell 10 @ 7.5 $0.50 $1375.50 Outperforms Stock Ownership in price range: $0 - $10.00 JAN00 Call Buy 5 @ 15.0 Sell 10 @ 20.0 ($93.50) $8781.50 Outperforms Stock Ownership in price range: $16.31 - $24.81 JAN00 Call Buy 5 @ 10.0 Sell 10 @ 15.0 ($62.00) $6313.00 Outperforms Stock Ownership in price range: $12.25 - $19.88 JAN00 Call Buy 5 @ 5.0 Sell 10 @ 10.0 ($62.50) $3812.50 Outperforms Stock Ownership in price range: $9.12 - $14.88 JAN00 Call Buy 5 @ 7.5 Sell 10 @ 10.0 $500.00 $3125.00 Outperforms Stock Ownership in price range: $0 - $13.50 JAN00 Call Buy 5 @ 5.0 Sell 10 @ 7.5 $562.50 $1937.50 Outperforms Stock Ownership in price range: $0 - $11.12

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