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

To: JohnM who wrote (2576)	10/4/2001 10:44:44 PM
From: BDR	Read Replies (1) \| Respond to of 5205

Reasoning? You are assuming I gave this a lot of thought.(g) Generally I have a feeling that the recent run in prices will not be sustained. I guess that is obvious, since, if I thought prices were going to continue to run I would have not sold calls. There may be a bounce if Congress passes a stimulus plan but I think some of the expectation of that happening is already reflected in prices the last few days. Also I am not sure that prices are going to drop hard or I would have written at-the-money or in-the-money calls. I sold one month further out than the front month for a better premium and to give me a little more wiggle room. Corning was an exception because it doesn't look like it going anywhere fast and the Jan Calls looked like the first expiration with large enough premiums to make the transaction worthwhile. GLW and JDSU are far from a recovery at the moment. I felt I was getting a very reasonable yield if not called (especially given my reduced expectations these days) and a healthy return if I am wrong about the strength of the market and end up getting called. I don't know the exact stock price at the time of execution. I entered the orders between 8:00 and 8:30 AM and then left the house for a couple of hours. Using the equity price at about 8:30 AM, the yields are approximately as follows: Equity Price Call Price % If called GLW 8.05 .65 8% 35% SEBL 19.20 2.40 13% 19% JDSU 7.10 .75 11% 18% QCOM 45.10 2.25 5% 17% Note these are in both tax-exempt and taxable accounts, but I have capital losses in the taxable accounts sufficient to shelter any and all gains that might result from these positions. :-(