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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: Herm who wrote (11802)	11/11/1999 9:03:00 PM
From: virgil vancleave	Respond to of 14162

Sorry to hear you are ill. I hope you get better soon. I have never had pneumonia, but my wife has and she was pretty miserable. Took a while to get better also. As you probably noticed, the market has made a nice move up. Notice also, that it is the naz and smaller companies moving up and showing the best growth now. This points us down the road of historically higher inflation and interest rates, which are already moving upwards and reached new yearly highs not long ago. Anyway, as you know, I am the "bear" on the thread and although I am currently all long and have been now for near 2 months, it appears that caution is the word here. Market is historically weak in late augst through mid october, followed by a usually impressive rally just like we have, and then by a slower period. And late november through december brings with it earnings jitters and warnings. Add to that is the potential Y2k deal, which I really don't think will be a big deal. Hope you get better soon as we all miss your informative posts and also options expiration is quickly approaching. Today was veterans day and as you know, I am active duty in the navy so had the day off and watched the market most of the day. Get well soon Herm.

To: Herm who wrote (11802)	11/11/1999 9:09:00 PM
From: Richard James	Read Replies (2) \| Respond to of 14162

Anoyone but Herm, who should rest up. Sounds like you really are ill. Understand the worse thing you can do is push yourself, when you think you are recovered. Force yourself to rest. Anyway, sold some Apr40 covered calls just 3 days ago for 5.625 when the stock (TYC) was 39.375. This is my first experience with an option. Stock has jumped up to 44.125 as of the close,when I could have bought back my calls for 8.375. Am I correct, in that calls price movement is lagging behind that of the stock? Is this normal and why? Current Price of Stock: 44 1/8 Less Price sale of call: 39 3/8 Appreciation of Stock: 4 7/8 Buy to Close Call: 8 3/8 Sell to Open Call: 5 5/8 Loss on Option Trade: 2 6/8 Net Result of closing Stock and Option positions: 2 1/8 Actually, I don't plan to sell the stock, but close the call. Does this make sense. Assuming that the stock will be above 50 by expiration in April, the results would be: Keep open position until called 40 (assume they will be called): 5 5/8 45 5/8 Assumed Price of Stock at time of expiration: 50 Reduced by loss on option trade: -2 6/8 47 2/8 I guess that it would make sense to cover now, if the stock price will exceed the 45 5/8 plus the cost to cover, 2 6/8, which is 48 1/8. If it will, only the market god knows, but have I at least thought this out half assed right? (I realize that I haven't included the value of time or commissions and fees)