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

To: DiB who wrote (4213)	4/16/2004 6:02:21 PM
From: Jon Khymn	Read Replies (1) \| Respond to of 5205

This is good, really good, this is a great thread... I've never seen this many caring people in any other thread. I sincerely thank all of you who chipped in to help me out my new CC experiment. Now back to drawing board... I don't fully understand your point but I think you are concerned... when after RMBS hit 15 and I write June 15 then, RMBS goes back to 17 then I get "called out" Fisrt of all what's a "called out"? If the stock price goes up after I write a call, My net position should be same, no? My net profit will be fixed at $1(assuming I wrote June $15 call at $1) Stock price goes up $2, then option will go up $2 so I'm not any worse off if stock price goes up. (Actually option price will not go up by $2, but less amount) I started off this real bad, just my luck... This is what happened so far. I bought RMBS at $28.49 Sold May 30 calls at 1.75 coved May 30 C at <.75> Sold May 25 C at 2.25 My RMBS cost is about $25.37 as of today.(details at the bottom) 1. So if RMBS closes at $25 on May 21, I'll be just about break even. 2. If the stock goes up (even if it goes to $100), I'll still break even, no gain. 3. If the stock goes down to $20, I'm losing $5/share (But this is instead of losing $8.50) The good news is I've reduced some of my loses since RMBS tanked as soon as I bought the stock. The Bad news is I have no gain potential at this point until May option expires... CC TESTING DATE SHARES PRICE TOTAL COMM. TOTAL COST RMBS STKS 14-Apr 500 $28.49 $14,245.00 $10.00 $14,255.00 May 30 C 14-Apr -500 1.75 $(875.00) $19.00 $(856.00) May 30 C 16-Apr 500 0.75 $375.00 $18.00 $393.00 May 25 C 16-Apr -500 2.25 $(1,125.00) $19.00 $(1,106.00) Curernt Stock cost * * * * * $12,686.00 Stock basis / share * * * * * $25.37 Current RMBS price * * * * * $25.30 Net gain (loss)/Share * * * * * $(0.07) Regards, Jon