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

To: FaultLine who wrote (1718)	8/1/2001 11:25:28 AM
From: Dr. Id	Read Replies (1) \| Respond to of 5205

Ken, Have you thought about selling some NTAP puts? It could add a bit of premium, and allow you to buy back in a little lower than the current price if called away on your Aug 10's. I've been selling puts for the last two months as the market was in doldrums. I've sold Aug 35's on Sebl (after taking a $1000 profit on the July 35's and rolling forward) for 4.30 (currently trading at 1.80) and Aug 20's on VTSS (after taking a $500 profit on the July 20's and rolling forward) for 3.40 (currently trading at .80). I do think it's the equivalent of a buy write without buying the stock, and is a nice strategy in a down market that lets you have "some action" without trying to sell calls at too low a strike. And, if the stock stays down, you're buying it at a lower price than the current one and hopefully it's a stock that you're wanting for the long term anyway. dDI

To: FaultLine who wrote (1718)	8/1/2001 6:44:31 PM
From: Dan Duchardt	Read Replies (2) \| Respond to of 5205

FaultLine, Another alternative besides selling puts ala Dr. Id's note is to roll forward your calls. There is little to be gained trading strike for strike, but selling the September 12.5 or 15 is not bad. It would cost you a net of about $3 to buy back your AUG10 and sell a SEP15, but you raise your upside potential by $5. If NTAP stays up around 15, that $3 will earn you $2 in about 6 weeks time. That's not bad. The situation will improve for doing that roll out if NTAP retreats from here, but it will cost you more if NTAP continues higher. There is virtually no time premium left in the AUG10, and the ATM SEP15 have as much time premium as they are likely to get. Dan