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

To: fmikehugo who wrote (3854)	7/19/2002 9:24:02 PM
From: alanrs	Respond to of 5205

While early exercise isn't unheard of, I wouldn't concentrate on that as my main point of concern in covering those shares. It sounds to me like you don't want them exercised at 15 at all. If that is the case, you might be better off looking at a higher strike a few more months out. Typically, the risk is that the stock trades above 15 at expiration. The guy who bought at 0.25 will sell the option rather than exercise in the vast majority of cases. ARS

To: fmikehugo who wrote (3854)	7/20/2002 1:59:47 AM
From: DiB	Respond to of 5205

IMHO Oct 17.5 or Jan 03 17.5 or 20 look reasonable...

To: fmikehugo who wrote (3854)	7/20/2002 7:16:14 AM
From: the dodger	Respond to of 5205

Mike, I pretty much agree with DiB - But because AAPL has a unique characteristic (their hoard of cash) - I have a slight twist... Sell BOTH the Jan15 calls and puts - you should get about $5 in premium. That means if AAPL closes between 10 an 20 on op ex day - you're ahead of the game. Advantages... Downsde risk: Should be fairly slim - because Apple is sitting on cash equal to $12 per share - and as a rule, that's pretty much the bedrock price for a stock. Upside Risk: Your stock is called away (in the 2003 tax year) But that would mean you effectively exited your position at $20 a share. Of course, you would still have the option of buying the calls back if you so choose. Just a thought to entertain... td