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

To: Dominick who wrote (3230)	1/11/2002 5:54:12 PM
From: Uncle Frank	Read Replies (2) \| Respond to of 5205

The thread is geared, as its title suggests, to beginners and/or those interested in relatively simple and straightforward strategies. >> As for my trades, they ARE in reference to covered calls... So what's up with the attitude? Though a covered call was used in your buy/write play, you've drifted far afield from the simple and straightforward. In fact, Roth identifies the fence (aka hedge wrapper or collar) as an advanced options strategy designed to protect profits in a holding (see chapter 32 of his book, "LEAPS"). I have two problems with you introducing it here: 1. It is a strategy that employs covered calls, but is not a covered call strategy per se. 2. You've misapplied it. In point of fact, the simple solution to escaping your buy/write on HAL would have been to buy back the call and sell the stock. At today's closing prices, you could have closed both positions for a pittance: 1/8: buy 100 sh. HAL @ 11.14 = -$1,114 1/8: write 1 contract HAL Feb$10 calls @ 2.10 = +$210 1/11: buy 1 contract HAL Feb$10 calls @ 1.85 = -$185 1/11: sell 100 sh. HAL @ 10.95 = 1,095 Bail out cost per 100 shares (disregarding commissions) = -1114+210-185+1095 = -$6 uf