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: Herm who wrote (8594)	9/17/1998 1:08:00 AM
From: Joe Waynick	Read Replies (1) of 14162

Herm, LDG is making me crazy. I was sitting in front of my RT quote screen today around 3:30 EST (12:30 where I am), ready to pull the trigger at 37 1/8, when it suddenly sprinted to $38! I have a sneaky suspicion the MM's are going to close this one at or slightly above $40 on Friday. Then let it drop next week. I'll hold my position until Friday, sell at or above $40, and load up with another 35 cheap puts @ 3/8 or less, (for a total of 50). That'll leave me naked 15 Oct $40 calls, naked 50 Oct 30 puts, and a $1,500 profit on the stk. On another pullback to $37 I can B/E on the calls, sell the puts for 13/16 or so and collect $4,062.50 -- leaving me with a profit of $1,400 after commissions. The alternative is to just sell the calls, sell 35 puts and I'm totally out. Keep the remaining 15 puts for further downside profits since I'll be at no further risk of my capital. If the stk pauses at $38 next week, I'm dumping everything for a B/E and count my blessings. What do you think?

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