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: Vol who wrote (8775)	10/8/1998 1:01:00 PM
From: Zach E.	Read Replies (1) of 14162

Hey Volunteer, 10/6/98 SPX 985 9% out = 1075 Nov 1075 call 12.8 bid Margin requirement = 98.5 (10% of the index) One and one half month return = 12.8/98.5 = 12.6% Approx 8% per month Have I been smoking something? Can someone shoot a hole in this plan? I think that the problem is, that the premiums on index options are currently a lot higher than what is typical. Check out the VIX, it was really high on 10/6 (of course, it's even higher now). My guess is that typically, 9% out premiums are going to be a lot smaller than they are now. VIX = volatility index, a measure of how expensive option premiums are. Zach

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