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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: NateC who wrote (11366)	8/10/1999 2:15:00 PM
From: AJ Berger	Read Replies (1) \| Respond to of 14162

A friends ideal covered call idea he came up with today. You can pick up PSFT now as it hovers around 13 1/8 and get 1/2 on a SEP 15 CALL. Your net debit is 12 5/8 - commissions. SO you have downside protection that is adequate to cover you into the next level down. That is to say, if September rolls around and PSFT is only trading at 11, (which is lower than it has seen in forever) you'll still get something respectable on a near-term 12 1/2 option such as the OCT 12 1/2 or NOV 12 12. Since you are only out 12 5/8 for the stock at that point, you will almost surely be ahead. On the upside, should PSFT rise to 15 or better by September, you've got yourself a beautiful double-digit-percentages victory on your hands. You can play it super-conservative with a simple SEP 12 1/2 covered call.