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

To: FaultLine who wrote (1302)	7/3/2001 11:24:20 PM
From: Dr. Id	Read Replies (1) \| Respond to of 5205

Now, I'm not sure what I am going to do about this situation, but with the Time Premium getting so small I do have to consider the real possibility that I may get called real soon now, so I may not have much time to decide my next move. Incidentally, the MSFT calls I bought are in the toilet too... :o( --dfl@onceagainproudlyonthetoptencontraryindicatorlist.nuts Ken, I still think that you have time...the likelihood of getting called out early is still very low. Why would someone call you out when there is ANY time premium left? Why not just sell the calls and buy the stock? Unless the time premium moves to negative territory, I doubt that you need to worry about getting called away. You have other things to worry about! (Like how and if to repair...):-) Dr.Id@dejavuwithmyNTAPcalls.pov

To: FaultLine who wrote (1302)	7/3/2001 11:50:55 PM
From: JGoren	Respond to of 5205

it's very unlikely you will get called at this point in time; holders more likely to sell their calls. i think qcom will recede a little in the next few days, unless the momo guys jump on--but see no evidence of that yet. the danger is going to be more good news from Europe, such as multimode chips, carrier overlay. those things are imho coming; the only question is the time frame. unless the general market tanks, i think qcom is moving to a higher trading range, because the "uncertainty" of the idiots about qcom getting royalties on wcdma has been removed.

To: FaultLine who wrote (1302)	7/4/2001 12:02:14 PM
From: JohnM	Read Replies (1) \| Respond to of 5205

Ken, I've not had such a deeply ITM position before but it is interesting to me (in a perverse sort of way) that the claim that the farther ITM or OTM a call is, the smaller the time premium will be is supported by this QCOM move (see McMillian, Fig. 1-2, p.11). I'm certainly learning from this discussion--this post from you and the others which follow. Thanks for doing it. As you will recall, this was the scenario which worried me, though I certainly did not expect the Nokia news for sometime. I thought some things on JGoren's list, his post a bit later on, were more likely to pump Qcom into a higher trading range near term. I've also read Dale Russell's later post and found it very helpful. I would love, to say again, to write ccs on Qcom. It's our largest holding. And I would do so if I thought there were only downside risk. Right now, even given the state of the market as a whole, I worry about the upside risk. And am writing ccs on Gemstar and Siebel, which are, incidentally, in the money right now. But I'm waiting on them. John

To: FaultLine who wrote (1302)	7/6/2001 12:20:24 PM
From: FaultLine	Read Replies (6) \| Respond to of 5205

For those of you who were interested in my time premium discussion on Tuesday, QCOM has dropped by about 4.50 in the last two days. Now that the underlying has moved closer to my 55 strike price, we should expect to see a bit of a rise in the time premium. (see McMillian, Fig. 1-2, p.11) On Tuesday the time premium had sharply dropped to 0.50. Today, QCOM is presently quoted at 59.20 with the JUL 55 call at BID 5.60, ASK 5.90. The time premium now = 5.60 - (59.20 - 55) = 1.40. This week the changes certainly support the statement that as the price of the underlying moves farther from the strike, the time premium will decline, and conversely. Frankly, this seems counter-intuitive to me as we now have less time to expiry than on Tuesday and the expectations for this call have declined since Tuesday. Clearly the mathematical predictions are correctly realized, but at a gut level I don't get it. Anyone interested in giving me a "common sense" explanation?* --dfl * see profile for def. of common sense...