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

To: Uncle Frank who wrote (4997)	6/2/2009 10:26:10 AM
From: CrackheadBob	Respond to of 5205

If I have to buy the calls back, say in this scenario with the stock trading at $44.30 at $3.30 on expiry day, I plan to roll those out into the July $42.5. It will depend on the exact stock price and what the time premium is, but I think that I can probably get away with a trade there with a slight loss overall (or somewhere close to it). To answer the second part of your question, what the chances are of QCOM seeing $41 at some point this summer....I have never thought of myself as smart enough with respect to where a stock price ends up or why. Every time I think I know where it is headed because of some piece of good news, etc, it seems to move the opposite of what I think. However, I think that the overall sentiment in the market now is fairly positive and that has always been a good time to write calls. I don't think that the market has seen the last of some significant downside moves so I think if I keep rolling this out and up, I will have an opportunity to have these calls expire worthless and still have a gain. As I mentioned earlier, this is the most upside down I have ever been in a covered call trade and I thought I would take the opportunity to see if I can continually roll these as I have and pocket the time premium and eventually get out. I will let you know how this next leg of my trade goes.

To: Uncle Frank who wrote (4997)	7/8/2009 10:57:42 AM
From: CrackheadBob	Read Replies (1) \| Respond to of 5205

Hi UF: I'm still rolling up and out on this position. Here are the next two moves: I bought back the June 41's at $4.73; Sold the July 42.5's at $3.77 Bought back the July 42.5's at $1.71 Sold the August 44's at $2.18 Here are the first parts of the trade: Sold the April 37.5 for a $1.50, and bought them back for $3.75. Sold the May 40 for $2.60, and bought them back for $.75 Sold the June 41 for $1.55 My final tally right now is that I am up $0.66 total and my new strike is at $44. The stock was originally trading right around $37 when I opened the position with the April $37.5's. I've been able to participate in the roughly 20% move in the stock, still get the dividend payout in June, and am slightly up on the cashflow side. I have not been able to generate as much cash from these shares as I would like since they have been tied up in this trade. My hope is that my strike price is finally where it needs to be to get called out on this next month. If not, I will most likely keep rolling this out.