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

To: Mike Buckley who wrote (3773)	5/29/2002 11:45:58 AM
From: Gary E	Read Replies (1) \| Respond to of 5205

Mike, Can you or anyone explain why that was a good idea? On May 15 SEBL was $24+ now it's under $19 How is selling a call where you pick up 85 cents worth loosing 5 bucks worth of stock ? Is there a point when you will say this is a pos and just sell it before it's in single digits maybe ? Hal <<On May 15 I wrote Siebel June calls with a $27.50 strike and collected a premium of $.90. Today I paid $.05 premium to uncover.>>

To: Mike Buckley who wrote (3773)	5/29/2002 4:40:58 PM
From: Dr. Id	Read Replies (2) \| Respond to of 5205

On May 15 I wrote Siebel June calls with a $27.50 strike and collected a premium of $.90. Today I paid $.05 premium to uncover. --Mike Buckley Mike, On May 15 I wrote Siebel Aug calls with a $27.50 strike and collected a premium of $2.55. I am waiting for a good point to uncover (currently .35 by .45). Part of my new strategy of selling calls at "further out" strikes... (I've tried every other strategy...why not this one?) :) dDI

To: Mike Buckley who wrote (3773)	5/30/2002 1:55:56 AM
From: Thomas Tam	Read Replies (1) \| Respond to of 5205

Is it worthwhile to cover since it will probably expire worthless? Lost the nickel and commissions. Of course, if it ramps up a bit you can sell again. Thomas

To: Mike Buckley who wrote (3773)	5/30/2002 1:58:07 PM
From: BDR	Read Replies (1) \| Respond to of 5205

Sold at $.90, bought back at $.05. Regarding the decision to buy back calls, I look at it as a matter of efficiency of the investment. In this case you can bank almost 95% of the potential profit in two weeks. You will only get another nickel by waiting another three weeks to expiration. Given that buying back removes the cap on any sudden appreciation in the stock that might occur and/or gives you the flexibility to write again, at either a lower strike or at the time of another run up in price, I think the .05 paid is worth it. Now, if it was only a week to expiration I might not bother to close out the position. Of course the reason the call has dropped is because of the rapid drop in the stock's price. You and I have different approaches to Siebel. I am doing buy/writes at lower strikes and am not concerned about being called since I, unfortunately, have no capital gains in the stock to protect. Even so, writing the November 25 (3.60) and 22.5 (4.50) calls have not yielded enough premium to protect against the current drop. It was my intent in doing the buy/write to hold to expiration, but I would consider buying the calls back for the same reasons given above if the premiums erode much more. In two weeks the premiums have dropped 50% for the calls I sold. I will have to wait five and a half months to get the next 50%.