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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 (13081)7/22/2000 2:14:45 PM
From: Bridge Player  Read Replies (1) | Respond to of 14162
 
Herm, if you are confident in the long term success of Electronics for Imaging (EFII) and a believer in their management (I am one), here is an interesting combo play that has some appeal:
Buy Jan 15 2002 leap call for 14 1/2 (closing ask)
Sell Jan 50 2002 leap call for 3 1/8 (closing bid)
Sell Jan 25 2002 leap put for 6 3/4 (closing bid)

Net cost: 4 5/8.

The breakeven price at expiration in 18 months is slightly over 22. At all prices over 25 at expiration you have better than a double on your net cost, with maximum leverage at 50 or above better than 7:1.

Scanning the leaps tables for 2001, 2002, and 2003 would of course reveal literally dozens of similar plays that can be tailored to suit individual risk/reward preferences.

BP.



To: Herm who wrote (13081)8/5/2000 10:54:24 AM
From: pranadude  Read Replies (3) | Respond to of 14162
 
Herm or anyone,

I know I can usually buy stocks at the bid price and sell at asking price on the NAZ, but can you do that with options on CBOE? Do you always have to pay for the high spread?

This could make a huge difference over the long run.

Thanks,

Richard


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