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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 (10230)	4/4/1999 4:41:00 PM
From: NateC	Read Replies (2) of 14162

Herm and thread....The LEAPs look good. Say, 35 JAN01 LEAP @ $18.5 and sell a July 50s @ $3.5. Not bad! I'm the student from hell....I didn't get this through my head well enough the last go around...about a month ago...(and, yes...I bought the Roth LEAPS book also). But in the event of exercise (At expiry,let's say the underlying is now at 52) on this position (spread) Is it not true that your broker exercises both sides (in order to assign your July 50 CC).... Does the broker exercise your LEAP.....buy the shares at 35??...and if so...does broker keep the difference between 52 and 35?..and you lose??...or do you automatically exercise your LEAP at 35, in order to deliver the shares to cover the call exercise? Or might the LEAP by July be worth, say $21....and you only lose 3 bucks on it? would appreciate understanding this better signed, (dimwit, getting it slowly)

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