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

To: robwin who wrote (1120)6/20/2001 4:12:00 PM
From: Uncle Frank  Read Replies (1) | Respond to of 5205
 
Bought 5000 NEWP average price : $23.29
Sold 50 July 22.5 Calls $3.50
All comments welcome.

You asked for it <gg>. My reaction would be influenced by knowing whether you have positive expectations for newp based on fundamentals, or were just attracted by the high premium. The fact that you wrote ITM calls would seem to indicate you don't have much confidence in the issue. At best, you could earn a return of of (22.5+3.5)/23.29=11.6%, but if the stock falls, you might wind up $3.50 in your pocket, a big red number in your portfolio, and an unintentional long term holding, similar to JohnM's play.

duf



To: robwin who wrote (1120)6/21/2001 1:55:12 AM
From: StockJock-e  Read Replies (2) | Respond to of 5205
 
You will be asking yourself why you didnt write the 25's instead... they will be $3.50 in no time. I think you pulled a good trade.


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