rudedog, if you sell the Feb80 calls your stock will only get called if DELL is over 80 at the expiration date (technically the close of the market on Friday, February 19th, although they officially expire on Saturday the 20th.) Here is a must read for anyone interested in options, compliments of steve (hpeace):
techstocks.com
If your stock gets called it is no different than selling the stock at the strike price you are called at - and the applicable capital gain holding periods and rates apply. You do have more flexibility though - for instance, if your stock is going to be called and you think the stock has some more to run, you can simply buy back the calls (at a loss, presumably) and write more out into the future. And most times this practice won't actually require any new cash.
Here is a link to check option prices:
cboe.pcquote.com
The Feb 80 call was 3 1/8 earlier this morning. $150k in your pocket for agreeing to sell your Dell by Feb 19 for $80 isn't too shabby!! But you have to be the type of person who wouldn't be upset if Dell is 100 by then. If you think Dell will be "well below" 80, then maybe you could sell one of these:
Jan 70 - 4 1/4 this morning
Jan 75 - 2 1/8
Feb 70 - 7 3/8
Feb 75 - 5 1/8
Remember too, since you think DELL will be way under 80 in Feb., if you sell any of these calls and the stock tanks, you will be kicking yourself for not simply selling your shares at these levels.
Hope this helps, our ledger is way out of balance in your favor !!!
Robbie |
