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

To: JohnM who wrote (926)	6/6/2001 9:29:17 PM
From: Uncle Frank	Read Replies (3) \| Respond to of 5205

>> $51.15 as the purchase price and $3.10 as the premium, you get 3.5% if called and 6% if not. Could someone check me on that? Buy 100 sh. sebl at 51.15 = -$5,115 Write 1 contract of June 50 @ 3.10 = $310 If called, sold 100 sh. sebl @ 50 = 5,000 Return = (5000 + 310)/5115 = 3.8% If not called, we can't compute the return until we know the closing price on the day of June options expiry, which is 6/15. Since the option is in the money at the time of the sale, the premium consists of 1.15 of intrinsic value and only 1.95 of time value. Commissions aren't much of a factor; I am selling multiple contracts and the cost comes out to a few pennies per share. Actually, my plan is to buy back this call should sebl dip at any time over the next 6 market days. My goal is to keep the stock and at least $2 of the premium. uf