Franz, you need to go back and read my post. My theoretical illustration was based on an investor having received a Margin Call. According to your illustration, you are writing calls and buying back at current prices. My illustration is after the stock has plunged $26.00 to $44.00. However, even using your example you are wrong on a couple of points. 1. 1,000 shares times $24 is $24,000 and not $20,400. 2. You are not taking into account the additional margin you get when you sell the calls. It is $48,000 not $20,400 or $24,000 as you should have said. As you can see $48,000 divided by $44 = $1,090
shares and not 800. 3. Why would you lose your stock at $70, you simply roll out to a higher strike price. I did not say that it is better to write covered calls with everything being equal. I was simply trying to help some people that my have received margin calls or might be in the process. I think too many people get scared and bail when they really don't have to. If I need to go further with this I will. I just got in from a party and my head is a little foggy.
regards
Voltaire
Regards
Voltaire |
