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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (140800)	12/5/2001 4:39:12 PM
From: TimF	Respond to of 1583862

I don't know much about covered calls...if you sell them, are they converted to AMD shares? Why did you put some in your 401s if you planned to sell them? Covered calls are like any other calls except that you own the stock that you sell the calls on. If I sell AMD calls with a strike price of 20, and AMD is above 20 at expiration then most likely the holder of those calls will take 100 of my 110 AMD shares in my taxable acount (calls cover blocks of 100 shares. I can't sell 1.1 call orders so the 10 shares would be uncovered) at a price of $20 each but atleast I have pocketed the premium. If AMD stays below 20 then I get to keep the shares and the premium for selling the calls. The problem is its hard to make enough money after commissions with selling 1 out of the money call order to make up for limiting your upside potential if you right near term calls. I could right further out and get more premium but then the upside on my shares is limited for a longer period of time. I might just start putting a stop loss in, raising it as AMD goes up. Tim