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To: Hightechhooper who wrote (124209)1/4/2001 6:05:00 PM
From: maui_dude  Respond to of 186894
 
HTH, Re : "If I can write for $1 each month then I could get $6 worth of benefit in six months (versus a smaller premium if I wrote farther out at higher strikes).

Sounds good, as long as you are aware that the chance of getting called are higher.

good luck.

Maui.



To: Hightechhooper who wrote (124209)1/4/2001 9:46:29 PM
From: Seyda  Read Replies (1) | Respond to of 186894
 
Hightechhooper,

I am a long long term lurker on this thread. I have been observing your posts with interest. Here is some help for the option value computation.

In order to estimate the residual value of an option you may use the following option price calculator (This is based on Black & Scholes Model) and it is available at

cboe.com

or

tradetrek.com

Option values are dependent on volatility, expiry date, interest rate, strike price, dividend, market price. You may experiment with different values via the formula. For volatility you may obtain your estimates from the following address,

cboe.com

Of course the results will still be no more than a mathematical estimate. However, they may have some value as you compare different strategies.

I wish you best.

Seyda



To: Hightechhooper who wrote (124209)1/4/2001 11:49:02 PM
From: kapkan4u  Respond to of 186894
 
Beware of a possible domino effect when writing covered calls while at the margin call threshold. The stock drops a little, your broker sells some stock to maintain the margin and uncovers your calls. If you are not authorized to write naked calls, he will also close your calls. The calls can be easily closed for a loss because of the spread. This in turn can trigger more margin maintenance selling and so on.

Regards,

Kap