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: Clean who wrote (7598)	6/10/1998 10:16:00 PM
From: Tom K.	Read Replies (2) of 14162

Clean, <<Can you give me some examples of options you've been watching as possible sells to open?>> Here's one of the situations that I'm currently in.... I wanted to buy Abercrombie & Fitch (ANF). Actually my college daughter was looking over my list of potentials and said that I should buy this stock for her. My analysis is that both the fundamentals and the charts are quite good.... check them yourself. On May 14, the stock was around $42 so I put $6000 aside in my margin account, sold 3 Jun 40 PUTs at 1 7/16 for a net of $406 figuring I'd probably get to own it for $40. Today the stock is about $44 and the PUTs are down to about 1/4. Tomorrow I'll probably buy them back and net out at about $300. This return is $300/$6000x100= 5% for 1 month or 60% annualized. That meets my goal for this trade. So now I have to explain to the daughter that dad made 60% on his investment but still doesn't own the stock that she wanted. I'll have to try again next month. Hope this helps. Tom

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