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

To: Night Writer who wrote (11320)	8/1/1999 12:18:00 AM
From: Hectorite	Respond to of 14162

A bull spread is just any pair of options set up to be profitable with upward movement of the stock. It can be set up anyway you want. Normally the options have to be near the money for the risk/reward to make any sense, so all the books give those examples. Our case study (the CPQ deal) is a bit unusual to be so far OTM, but what really stinks is how he go the full 5 pts. That's boarder line criminal. He has ZERO risk. The early assignment problem (which is a good point, hadn't thought of that) is not really a problem. He can feed off his pile of long 45 and the cash hoard to cover. So, say he gets whittled down to 500 contracts by expiration..."Darn! I only made 500K with zero risk." Poor baby.