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

To: EnricoPalazzo who wrote (277)	4/26/2001 10:18:39 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> the "worst" possible outcome is when a CC gets called for a huge profit to the buyer. As I see it, both parties can win in that case, and offer my recent qcom activity as anecdotal evidence. The party who bought my April 60 calls made a huge profit and my stock was called, but I didn't "lose" anything. In fact, I was able to re-establish my long position for less than the strike price just a few days later, and kept the April premium. Given that few stocks will "run away" in today's market, that may not represent an unusual pattern. uf

To: EnricoPalazzo who wrote (277)	4/26/2001 11:23:26 AM
From: BDR	Respond to of 5205

<<Depends on your perspective, I suppose, but to me that's a good thing.>> I would agree since I intend to hold the underlying long term, although in a tax-exempt account I am less concerned about selling. I was writing from the perspective of the call writer who enters the position hoping for the maximal return on the position and that return comes if the stock is called away. For him/her it is a disaster to have the stock drop significantly before expiration. For me it is a non-event. I bank the premium and wait for the next chance to write a call.

To: EnricoPalazzo who wrote (277)	4/26/2001 12:15:29 PM
From: TsioKawe	Read Replies (2) \| Respond to of 5205

<<To me, the "worst" possible outcome is when a CC gets called for a huge profit to the buyer. That's a real, permanent loss of capital. >> If you had time could you explain the process of this process?? IE, are you saying if I sell calls in the money, and the buyer exercises his option to purchase my shares at that price, I dont get to keep the money that was given to the account for the writing of the calls....and If the calls go up in price, do I have to dish out any cash to the buyer?? Account is short 10 May 5s, wrote at 2.15, current bid on May 5s are 2.45, still holding the stock...Do I keep the money on the calls under all circumstances?? Thanks in advance Tsio