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

To: Jerome who wrote (4397)	4/12/2006 8:11:08 PM
From: TShirtPrinter	Read Replies (1) \| Respond to of 5205

Greetings, I'm a lurker <g>. I would say it depends on how much risk you want to take on the underlying stock. If you get within a certain timeframe, and the option clearly has a good chance of of expiring worthless, i might let it expire. I tend to try and and make a few bucks and close my position pretty soon and well before expiration date. Just my style and for the reason I usually don't really want to give up the stock. Gotta read and study it pretty hard. Tony

To: Jerome who wrote (4397)	4/14/2006 5:35:09 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

>> Do you unwind your covered call positions prior to expiration if you expect that will expire worthless? Any general rules that you suggest? This is complicated stuff, and stock specific. My approach will be based on my expectations for the underlying stock, and also the price/date at which I acquired it. For example... I wrote the April 65 option on SNDK on 2/27, and received a premium of $4.10/share. The stock is trading at roughly the same level as it did when I wrote the option, but the call is still commanding $1.60 with only one week to go until expiration. I'm prone to wait for the call expire, because I don't think the stock's going to run above 65, and $1.60 is a big chunk of premium. But even if the stock rises above 65, my return for the transaction will be 69.10, a 22% return on my purchase price of 56.65 on 2/24. There are so many angles to this game... duf