Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Shell R. Poust who wrote (11212)	7/17/1999 3:09:00 PM
From: Herm	Respond to of 14162

The IFMX LEAP (5s JAM02) is an option so it would require cash. Yes, if you have enough equity in your account they would spot you cash from the margin in order to pay for the LEAP transaction. You would then be responsible for (if called out) the CC strike price of written CALL(s). The LEAP is exercised at the strike price of $5.00. You paid $6.50 for that LEAP. $6.50 (margined in this case)+ $5.00 LEAP strike is $11.50 nut. Any CC strike below that would mean you lost money. When you net out after the commissions you are in the hole (red). So, if you are saying go for an AUG 12.5 CC @ $.75 IFMX spread. Then, you are right in that will would produce about 12% IF called out less commissions. There is nothing wrong with that logic. There is more risk since you have a smaller CC premie. But, I could live with that risk with IFMX at this point. The only reason I tend to go out a few months is for the larger CC premies which I leverage with sideshows. I make more from them compared to Wade Cook's trip meter turnover theory. I doubt he was a good cab driver! :-)