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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 (9529)	1/27/1999 6:26:00 PM
From: Casaubon	Read Replies (2) of 14162

The short squeeze is exactly the play I'm looking for on VRTX. When the stock hits $36.00 I'm going to start writing some calls . The company has a good drug in agenerase, albeit late to market(not that it matters but the delay was because of the wellcome/glaxo merger; not any failing on the part of vertex management). Vertex has a wide product pipeline. Interesting data from any of the phase II trials could spark some extra interest. But, you are correct in saying they won't show profitability in 1999. On the bright side, Glaxo is a strong force in the HIV market, and Vertex recieves a percentage of sales not profit. This will benefit Vertex in a market with thin profit margins (just ask Agouron). Now onto an options question. Suppose I were to write an april 35 call on Vertex, and the stock was at $40.00 the day options expire; I could either buy back the option for $5.00 or let the option expire and allow the call buyer to pay me $35.00 for the stock, correct?

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