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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Herm who wrote (8228)8/15/1998 12:01:00 PM
From: Playin my Cards  Read Replies (2) of 14162
 
Question for the experts:

I just got my E*Trade account set up to be able to write covered calls. They won't let me do anything "uncovered" yet.

I'm starting out small, with about $3500 cash in my account and have some basic questions about how I get charged commissions.

I have been trading CUBE for a couple years now and looking at the intraday, it fluctuates sometimes as much as a point (currently about 17 1/8. I bought 300 shares Friday at 17 1/16 on margin. I want to put an order to write 3 August Contracts for 17 1/2. Remember, I am starting small going for $100-$150 gains per trade to get my feet wet here.

Anyways, I think that I might be able to get about 1/2 for the August 17 1/2 if it goes up just a little on Monday. After commisions, I will net about $120 on the covered call. If I am called out this Friday, I will sell my shares at 17 1/2 and pay the commission. Are there any other commissions that I have to pay besides that sale? ie something additional because the call was executed?

Thanks for any help... Is my strategy sound here? I chose the August because I don't like to hold this stock very long. I just want to get in, make a quick small gain and get out.

Mike
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