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

To: alanrs who wrote (1372)	7/9/2001 7:49:47 PM
From: JohnM	Read Replies (1) \| Respond to of 5205

ARS, I'm also watching the Siebel July 45s and have come to much the same conclusions you have. However, I have two other thoughts that run around, somewhat unattended, in my head. The first is the argument that I've seen made in several settings that Siebel tends to run up on the front end of earnings reports and down afterward. I'm not certain that's true but it's worth keeping in mind. The second is the argument that the Nasdaq is trying to put in a higher bottom at this point, that earnings warnings may be about over, and that there is an increasing possibility we get a short term run up until earnings are over. Either of these arguments suggest Siebel could easily move above 45 between now and the point you and I wish to sell our calls back. I guess all I'm saying is that covered call writing is best done by those with the right long term conditioning--those who've spent rather larger portions of their recent work lives in somewhat cushioned chairs, hunched over computer screens, trying to recall the correct keyboard dance with their fingers. Gotta watch those numbers. But, after saying all that, I would love to see the $1 premium this week. I would buy back, definitely. Otherwise, I'm probably going to turn to strategies which come into play if I let the shares get called away. Gonna be on the road some of next week and, when I'm home, without the DSL connection for a day while Verizon upgrades it. So I need to make up my mind this week. John

To: alanrs who wrote (1372)	7/9/2001 8:46:06 PM
From: Uncle Frank	Respond to of 5205

>> if I wanted to reduce the risk of having this option out thru earnings, a fair price would be 2.15 tomorrow, 1.80 the next day and so forth, on to about $1.00 Friday. I think a buck would be very fair, since I'd get to keep 2.80 <gg>. Let's do it. duf

To: alanrs who wrote (1372)	7/9/2001 9:15:53 PM
From: William	Read Replies (1) \| Respond to of 5205

I just wonder why, given that this is a buy/write, that you are so intent on keeping the stock. I would think that in doing a buy/write that you would be happy to have the stock at or above the strike on expire day. In fact this month was my first buy of SEBL, actually a buy/buy/write. And I will be happy if I am called. But then again, I wrote the July 50's. But even if I had written the 45's, my return would be something like 20% in under 4 weeks, and that puts a smile on my face most every time. William

To: alanrs who wrote (1372)	7/9/2001 9:37:40 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 5205

ARS, I would expect that if the stock remains roughly flat, the option will lose about .35/day. FWIW, according to QCharts (actually RavenQuote fed by QCharts) the current rate of loss of time value for the JUL45 is .14/day. This pretty much agrees with a projection by the Options ToolBox (free from CBOE) that by Friday the theoretical price will drop about 5/8 to around 1 7/8. Of course, price variation could easily bring it the rest of the way to your target prices, but the .35/day for time decay only seems a bit too optimistic. I just started playing with the toolbox position analyzer over the weekend, but it lets you do some nice "what if" estimates based on price and date assumptions you control. I don't know if there is a new version out. The one I have (3.0) still works in eighths and does not allow volatility to be greater than 100, but 100 is real close for the SEBL JUL45. That much volatility is probably going to make this thing carry significant value into next week, so I tend to think the projection is reasonable. Dan

To: alanrs who wrote (1372)	7/10/2001 2:03:31 AM
From: BDR	Read Replies (1) \| Respond to of 5205

<< Regarding SEBL July 45. I am paying particular attention...>> I haven't been able to pay attention to much that's happening in my portfolio. My work has kept me very busy lately so anything I do needs to be not very time consuming. But I did take a look at the premiums for SEBL and made a move today. After the open this morning I saw that the bid was 0.80 and the ask 0.95 for the July 50 Calls. I put in a limit order at 6:45 AM local time, good for the day, to sell at 1.00 and went off to work. I see I got a fill sometime during the day with the bid and ask back to 0.80 X 0.95 at the close. I am not going to agonize about being called away. If SEBL goes up 7+ bucks in 9 days I will gladly take $50 per share. If it doesn't, I feel pretty good about $1.00 per share for about 5 minutes of my time, no stress, no analysis, very little brain work. dDR, investor of very little brain (apologies to A. A. Milne)