Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: RCVJr who wrote (5602)	10/24/1997 8:32:00 AM
From: Herm	Read Replies (3) \| Respond to of 14162

Hi RCV, The chart looks good for CREAF to test the $28 high. I doubt it will past above $28 on the first attempt. Nov. 22 1/2 Calls Sideshow: So, your Nov. 22 1/2 calls could be cashed in just before the $28 mark for instant cash. You should be able to get 5 to 5.25 for a $2,500 profit. Nov. 20 CCs Being Called: There is a very high chance you would be called. You stand to make $3.60 x 500 = $1,800 on the CCs for the Nov. 20s. Now, assuming that CREAF does stall a bit at $28, you could cover your Nov. 20s CCs now for around $6.25. You net cost basis would go from 16.40+6.25=$22.65 nut. After you factor giving back the premie that is a $3.75 penalty. So, you need to make at least $3.75 in the next CC premie and roll up one or more strike prices. The Dec 25s CCs might be a target and when CREAF hits the $28 mark may sell for 3.75. That would lower your net cost basis $22.65 nut-$3.75 premie Dec. 25s=$18.90 new nut. If called out in Dec. @ 25 your new adjusted profit would be $25-18.90=$6.10=$3,050. Taking More Risk! You could cover and wait for the CREAF to break through the $28 price range. The stock is WAY UNDERVALUED and the best quarter is coming up in December. Hind sight is 20/20 and nobody can predict the future. You have a profit anyway you look at it NOW!