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Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: orkrious who wrote (6635)8/15/1999 11:36:00 PM
From: rll  Read Replies (1) | Respond to of 60323
 
OT*Covered Calls

jay,

Yes, you could buy them back regardless of the direction of the stock price. Sorry about the confusion, what I was trying to say is this: by selling covered calls, you are assuring yourself a modest premium while limiting your potential profit if the stock flies, BUT there is no limit (other than if the stock price goes to zero) to the downside losses if it tanks. The buyer of the call actually has less downside risk and unlimited upside profit potential. Therefore, the time to sell a covered call is when you think the stock price is going to stay within the strike price +/- premium.

rll



To: orkrious who wrote (6635)8/16/1999 12:38:00 PM
From: Craig Freeman  Respond to of 60323
 
Jay, re: "Why not just buy them back?" In the case of SNDK (or any other rocket stock), when you buy back a sold call you get a large short-term loss while the stock's gain is still locked away as a future long-term gain. Cash is king but a tax write-off is a nice consolation prize.

Craig

PS Last night, I overheard part of a TV advertisement for a web site offering low-cost MP3 downloads. Did anyone catch the details?


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