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: Herm who wrote (10282)	4/9/1999 7:26:00 PM
From: NateC	Read Replies (3) of 14162

Personally, I hate buying back CCs at a lost. I would rather buy long sideshow calls with the premies and let that offset any gains lost in the stock appreciation. Herm...i'm trying to understand this a little better...maybe my math is screwed up....this seems like an important point. I owned AOL on 3/23..and it was at 129. I sold 4 contracts of the April 135 and received 5 3/4....so my nut on AOL was 123 1/4. So the darned thing runs up to 160...and the 135 calls are 25 in the money. If I buy them back....it costs me $25/share...and my nut becomes 148 1/4, right....but if I sell the May 165 at 15..my nut goes down to 148-15=133. If I'm called out in May....fine. However.....I've been thinking, like you Herm, that it's bubble has to pop...so I would buy some puts with the $ from selling the May 165. The May 145 Puts are about $10. Are you saying it might just be better, fewer commissions, less trouble....to get exercised...and move on to some other underlying stock that isn't overextended??

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