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

To: Mathemagician who wrote (1039)	6/12/2001 11:23:51 PM
From: StockHawk	Respond to of 5205

Wanna have some fun? Isn't that a song? Math guys just wanna have fun? That was a very interesting post. And since I would not mind owning more NTAP I tweaked your Naked Put scenario. You showed the possibility of selling the Jan 02 $15. Take a look at the $20 and the $30: Naked Puts Sell 2 Jan-02 20 Puts at 6.3 Cash Out = $0 Cash In = $1260 Net CREDIT = $1260 Capital Requirement = $4000 Equity Needed = $2740 If NTAP finishes above 20 the put expires, and you pocket $1260 If NTAP finishes below 20 the put is exercised, and you now own 200 shares of NTAP with a total cost of $2740, or a cost basis of 13.7 per share. Naked Puts Sell 2 Jan-02 30 Puts at 13.9 Cash Out = $0 Cash In = $2780 Net CREDIT = $2780 Capital Requirement = $6000 Equity Needed = $3220 If NTAP finishes above 30 the put expires, and you pocket $2780 (that's 86% of the equity needed) If NTAP finishes below 30 the put is exercised, and you now own 200 shares of NTAP with a total cost of $3220, or a cost basis of 16.10 per share. (note, the current price of NTAP for the purpose of this example is $17.84) StockHawk