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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: Sam2482 who wrote (12288)	1/29/2000 5:11:00 PM
From: Herm	Respond to of 14162

Think of it this way Vicki! You could have the LEAP for say one year or so generating premie income. It is hard to say what the final ROI% will be. For example, your first round generated $1.6875 reducing your LEAP net cost to $7.8125. Now, if you had a price increase in the stock and generated say $2.00 on the next spread round that would bring your nut down to $5.8125. It is possible to sell your LEAP for more than you paid for it because of increases in the parent stock price, thus, more intrinsic value in the LEAP. What would your ROI be then???? For sure, much higher than you are calculating. In short, you use up your CC LEAP horse, cash it out for another profit, and repeat the process over again. Or, keep picking up more LEAPs with the income. Also, there is such a thing as naked LEAPs for those with the credit line and experience to know when to sell them. All sorts of possibilities with big payoffs. Given the choice between a lower strike 2001 LEAP deeper into the money versus a further out 2002 LEAP, I would rather go for the lower strike price with the higher intrinsic value in order to capture a much higher delta. A shorter time fuse, yes! But, it could work in your favor if the price moves up fast during your holding period.