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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: BDR who wrote (201)	4/24/2001 2:19:52 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> For example, if you sold a LEAP call strike price 20 for $10 on a stock selling at 20, the ballpark return is 50% when the real return is 100%. Oh my, confused again. Buy ABC for 20/sh. Sell ABC 20 strike LEAP for 10/sh. Stock gets called at 20 At that point I'm holding 30/sh., which sure seems like a 50% return. Aren't you double counting if you use the $10 premium to reduce your cost basis, and then claim the same $10 as a return? duf

To: BDR who wrote (201)	4/24/2001 4:55:13 PM
From: Judith Williams	Respond to of 5205

came across as lecturing Not at all. It was a great post. And the difference between "ballpark" calculations and precise ones you point out gets exaggerated over time. I use the shorthand method mostly because I like to keep straight how my underlyings are doing and don't like to adjust the basis for that reason. Unfortunately, the underlyings are underlying at this point. On JDSU, also agree that prospects should improve in six months or so, but it's been a painful process and doesn't seem to be over for the short term. --Judith