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: Herm who wrote (12187)	1/16/2000 10:47:00 PM
From: PeterCS	Read Replies (2) \| Respond to of 14162

To Herm and Dan I understand what you both are saying, but I would like to propose another thought and have you point out what is wrong with the following and to poke holes in it. Suppose I buy back the IFMX option ( IFQAU Jan. 7 1/2 at 3 1/2 ) and sell the May 10 at 2 9/16 ( IFAEB ) By doing this I would increase the strike price by 2 1/2 to 10 and the break even point would be 2 1/8 ( what I received from Jan.7 1/2 ) +2 9/16 ( from May 10 )- 3 1/2 = 1 1/16 subtracted from 10 would be 8 15/16. My nut would be lowed by 1 1/16 from my stock price of 7 15/32 or down to 6 13/16. Or if i sold May 12 1/2 option (IFQEV ) at 1 7/8 I would increase the strike price by 5 to 12 1/2 and the break even point would be 2 1/8 +1 7/8 -3 1/2 (buy back of Jan 7 1/2 ) = 1/2 subtracted from 12 1/2 would be 12. My nut would then be lowed by 1/2 to 6 31/32. I see the advantage of these actions to be not to take a Debit and not to increase my stock price by 3 1/2 to 10 31/32. This would be like totally losing the last 3 months and just buying the stock at this time. Now if the stock does go up to say 16 if I am buying at 11 I will make 5 points if I hit the top. With the May 10's I make 3 points. With the 12 1/2 I would make 5 1/2 and still have a profit with anything over 6 31/32. I know I must have something wrong with what I have written, would you please comment? If this is all correct and with the strong chart on IFMX, I think I would sell the 12 1/2