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Strategies & Market Trends : Options -- Ignore unavailable to you. Want to Upgrade?

To: AMF who wrote (4492)	3/9/2000 1:15:00 PM
From: Poet	Read Replies (2) \| Respond to of 8096

Hi Anna, I'm in JDSU too and am starting to look at writing cc's, as I think it will rest post-split (looks like it started resting yesterday!). The good news is that the options chain tells you just what you'll be pocketing when you sell a call (also known as writing covered calls) or sell a put, for that matter. JDSU is set to split tomorrow afternoon. I'll be looking to cover my long postion in JDSU tomorrow, thinking that it will rest for a while. To me it looks like 300 is pretty good resistance, so I'll be conservative and sell the April JDSU 310 puts (YSUDB), now about $18. Lets say I have 2000 shares of JDSU. I can sell up to 20 contracts (since each contract governs 100 shares.) I put in an order like this: Sell to open 20 JDSU April 310 calls at a limit of $18. If it fills, I get $18x100=$1800 per contract. If I've sold 20 contracts, I have $36,000 deposited into my account. You have sold these calls to someone who is counting on JDSU going to over 310 in April options expiry. If JDSU doesn't get there, you keep the entire amount. You can also trade in and out of these calls (which I do a few times a month), rolling out of them when JDSU drops and the value of the premium goes down. Selling them again when JDSU goes up. This is how I do it. I don't completely understand Voltaire's method, unfortunately, but this seems to work for me. Feel free to ask questions, and here's the JDSU options chain: edreyfus.com