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

To: alanrs who wrote (4227)	4/17/2004 4:14:03 PM
From: Jon Khymn	Respond to of 5205

I see, thanks...eom

To: alanrs who wrote (4227)	4/18/2004 3:18:51 AM
From: Jon Khymn	Read Replies (1) \| Respond to of 5205

Alan, at first my yearly expectation was 50%, but I have changed to 33%, and here is why. This is the best I can predict for next 12 months. Assuming I can get 7% monthly premium from RMBS CC (net of spread and commission). 1. RMBS price to stay flat or climb, total 6 months: 7%x6=42% 2. RMBS price to go down, but not greater than option premium, total 3 months (1 to 6% down, I still make little): 3%x3=9% 3. RMBS price to go down between 7 to 20%, 2 months total: -5%x2=-10% (assumed I have chance to cover the first CC and rewrite at strike price) 4. RMBS tank 20%, total 1 month: -8% (again, if RMBS tank this bad, I should have another chance to write CC, that's why I put -8% instead of -14%) Total gain 51%-18%=33%. Does it look realistic?

To: alanrs who wrote (4227)	4/18/2004 4:04:25 AM
From: Jon Khymn	Respond to of 5205

I actually checked for RMBS's past 66 months monthly stock price... it looks much worse than I thought. About 20% of the time RMBS tanked avgerage of MINUS 30% 30% of the time the price went down by avg of Minus 8% And the rest of 50% stay flat or up. I'll need more like 9% premium rather than 7% to attain 33% annual return... Assuming 9% premium: 6x9=54% 3.6 months x1%=3% 2.4 x (-10)=-24% Total=33% If premium is 7% then, 6x7=42% 3.6 x (-1)= -3% 2.4 x (-12)= -29% [(30-7)/2=12] Net of only 10% return. ------------change % ********sorted 4-Apr 25.3 -10% -46% 4-Mar 28.02 -13% -43% 4-Feb 32.39 4% -38% 4-Jan 31.16 1% -36% 3-Dec 30.7 2% -35% 3-Nov 30 21% -32% 3-Oct 24.79 47% -29% 3-Sep 16.84 1% -27% 3-Aug 16.68 -7% -23% 3-Jul 17.96 9% -23% 3-Jun 16.52 -8% -22% 3-May 17.9 25% -22% 3-Apr 14.3 8% -21% 3-Mar 13.21 -13% -20% -30% 14 21% 3-Feb 15.18 -2% -17% 3-Jan 15.5 131% -15% 2-Dec 6.71 -27% -14% 2-Nov 9.21 65% -13% 2-Oct 5.58 29% -13% 2-Sep 4.34 -20% -11% 2-Aug 5.45 6% -10% 2-Jul 5.16 26% -10% 2-Jun 4.09 -38% -8% 2-May 6.65 0% -7% 2-Apr 6.68 -14% -7% 2-Mar 7.79 14% -7% 2-Feb 6.85 -5% -6% 2-Jan 7.18 -10% -5% 1-Dec 7.99 -7% -4% 1-Nov 8.55 5% -3% 1-Oct 8.13 10% -3% 1-Sep 7.36 18% -3% 1-Aug 6.23 -21% -2% 1-Jul 7.84 -36% -2% -8% 20 30% 1-Jun 12.31 12% 0% 1-May 11 -35% 1% 1-Apr 17 -17% 1% 1-Mar 20.6 -46% 2% 1-Feb 38.12 -23% 2% 1-Jan 49.38 37% 4% Dec-00 36.12 -6% 4% Nov-00 38.38 -15% 5% Oct-00 44.94 -43% 6% Sep-00 78.94 -3% 8% Aug-00 81.69 11% 9% Jul-00 73.31 -29% 9% Jun-00 103 134% 9% May-00 44.06 -23% 10% Apr-00 57.5 -22% 11% Mar-00 73.63 -2% 12% Feb-00 75.41 300% 12% Jan-00 18.84 12% 14% Dec-99 16.86 -4% 18% Nov-99 17.64 4% 19% Oct-99 16.91 2% 21% Sep-99 16.56 -32% 25% Aug-99 24.25 9% 26% Jul-99 22.27 -3% 29% Jun-99 23.05 19% 29% May-99 19.37 29% 35% Apr-99 15.03 -7% 37% Mar-99 16.09 -11% 47% Feb-99 18.17 -3% 65% Jan-99 18.78 -22% 131% Dec-98 24.06 9% 134% Nov-98 22.14 35% 300% 32 48% Oct-98 16.35 #DIV/0!