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

To: BDR who wrote (1570)	7/24/2001 7:28:08 PM
From: BDR	Read Replies (3) \| Respond to of 5205

I wanted to make the following post in part because the experience has revealed an aspect of market operations that I was not aware of and in part because I am thrilled (for now) at the outcome. As I indicated in the previous post on Friday, I was going to look at writing the SEBL Aug 35 Calls on Monday. Monday morning about an hour after the open I saw that those calls were bid 2.70 X ask 3.00. I entered limit orders to sell them at 2.80, good for the day. SEBL was trading at about 33.85 at the time. A little later SEBL had dropped to 33.20, my order was still unfilled and I went off to work. By the end of the day SEBL had dropped about 2.30 and my orders expired unfilled. I was kicking myself for not putting the order in at the bid. This morning at work my receptionist told me I had a call from Fidelity Investments. I trade almost exclusively online and I only talk to Fidelity a couple of times a year. They call me even less often. I thought, "Uh-oh." A representative was calling to talk to me about my sell orders for SEBL calls. He explained that they periodically scan the day's bid/ask to see whether orders were appropriately executed. Their system detected that, sometime after I placed my order, the Philadelphia options exchange showed a bid of 2.80 for SGWHG. I believe SEBL did rise briefly above 34 again that morning so that would make sense. I should have gotten a fill but didn't. He was calling to tell me that as of this morning Fidelity was adjusting my portfolio to reflect sales at my limit price. Today the calls are trading at 1.50 (down 46%) so I immediately show a profit. This is a new experience for me and I was wondering if some of the streetwise posters could explain how and how often this happens. Does Fidelity or the market maker on the Philadelphia exchange eat the cost? Do all brokers monitor trading this closely? In the meantime I am awarding an Attaboy to Fidelity. dUF, is this how you manage to trade back through time?(g)