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To: candide- who wrote (7764)	3/16/2000 11:36:00 AM
From: r.edwards	Read Replies (1) \| Respond to of 35685

bought 100 shares @95.5 more elon. I'm now looking for a small run to sell a march call.

To: candide- who wrote (7764)	3/16/2000 12:31:00 PM
From: Getch	Read Replies (1) \| Respond to of 35685

Hi Candide, How many days left to freedom? You never have to get called out; all you have to do is buy back the CCs. For instance, I sold the March 130 CCs on 1500 of my Q. Let's just say at the close tomorrow Q is at $135. I do not want to risk being called, so this morning I bought back the $130 CCs for $2 each. I sold them for about $5 a week ago, so I netted $3 each. If the stock price were higher, it would have cost me more, but I would have still realized about 1/3 of the stocks appreciation since the call price would have been less than the delta between the strike price and the price to buy the stock. i.e. If the stock was at 135 then 135-130=5 vs. an option price of maybe $4 tomorrow. I think I see the differences between the ways to play CC's. 1.) If investing for income generation to live on. Write CC's at a level will generate needed cash. Take cash, live well, get called out, get original pile of cash back, repeat. Any additional cash at end of month (now third Friday for us) can buy back if desired, see below. 2.) If investing for portfolio protection with appreciation. Write CC's at a level to generate desired protection and cash. Protection is in form of premium which has the effect of lowering basis in stock. From example above selling Mar 130's for $5 effectively lowers basis by $5. If stock stays below Strike Price, you also have generated cash in a flat stock. If stock appreciates, then buy back the Call near expiration without time premium. In this example, Sold Mar 130 for $5, then stock appreciates to 135. With $5 of intrinsic value (135 -130), buy back for $5. Effectively break even on CC, while stock appreciated and was covered. If stock goes to 140, buy back for $10. Loss of $5 on the CC, but underlying stock appreciated $10. Overall effect retain 50% of appreciation, while covered on downside. One more, if stock goes to 150, buy back for $20. Loss of $15 on CC, but gain of $20 on stock. Overall effect of retain 25% of appreciation. Another way to look at it regarding appreciating stock price. The upside limit regardless of how high the stock goes is the time value premium received at the time of selling the CC. In this case $5, because you will buy back call at Friday market price with no time premium (stock price less strike price). Please point out holes in this, as I freely admit to being in the learning stages still with this, and want to know where the gaps in understanding are. This post does not attempt to go into buying back calls on dips in stock price.