Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Network Appliance -- Ignore unavailable to you. Want to Upgrade?

To: Lhn5 who wrote (7729)	4/12/2001 2:20:44 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 10934

>> That is only a $2 premium, and there seems to be a very reasonable chance that by late May NTAP will be above 12.5. So basically you are selling NTAP for 14.5 unless it is below 12.5 at that time. I think you've got that wrong. Let's go through the numbers. If I am able to sell 12.5 covered calls at 4 and get called, my total compensation would be 16.5 (12.5 for the stock and 4 for the covered call premium). If the stock is at 12.5 or less at expiration, I would keep the stock and the $4 premium. If the stock is in the range of 12.5 to 16.5 at expiration, I could buy the calls back and pocket any differential. The only bad scenario would be if the stock rose above 16.5, in which case I would miss out on some appreciation. But with bad earnings coming out on 5/18 and May options expiring on 5/20, I'd see that possibility as pretty low. Do you agree? uf