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

To: FaultLine who wrote (391)	5/2/2001 6:56:07 PM
From: M. C. Orme	Read Replies (1) \| Respond to of 5205

dFL, I don't mind being pedantic sometimes...it's much less complicated. <g> And I can see what you mean about dMCO being too close to DoCoMo! Can't give up the dummy, tho...reminds me I don't have all the answers! Besides feels kind of like a membership emblem for this thread... To try to answer your question for sake of discussion: I bought GMST at 39.275 and covered with May 40 at a premium of $4. That makes my breakeven point before a loss around 35.27. Cost minus premium received. If share price would retreat close to that I would pay attention to uncover the call for a small amount and then resell at a lower strike. Probably at-the-money or in-the-money May 35. The idea would be to have the new premium absorb the cost of buying back as well as generate a little more cash. I think this is called rolling down if I can keep my terms straight. If it were close to expiration I may wait and then do it in the next month. I may also consider holding until there is a rally in the share price, or may hold since I wouldn't mind adding to my existing long term position anyway. Hope this is clear. Sometimes it's hard to write out all this option talk without getting confused. I guess as long as I can think it, or better yet execute it, I'll be okay. <g> regards, dMCO PS I found Thomsett's book extremely helpful and use it as a primer, as well as a warmup for McMillan.