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

To: Patrice Gigahurtz who wrote (5955)	11/23/1997 10:39:00 PM
From: RCVJr	Respond to of 14162

Two months ago, I had my stock called out from me and it closed 1/16 BELOW the strike price. I assumed someone took possession prior to the end of trading but, in any case, you will have to wait until tomorrow morning before you find out. I have heard of others who have not gotten called out. Let us know what happens!

To: Patrice Gigahurtz who wrote (5955)	11/23/1997 11:20:00 PM
From: Hunt	Read Replies (1) \| Respond to of 14162

Patrice On the first question, I don't have any idea. On the second about MACR, it probably won't if $10 was the ask price rather than the bid price. No profit in it for the person or MM to call out your stock. That being said I have had stock that was over a dollar in the money that was not called out on expiration day. So sometimes it is a crap shoot. The question I have for you is if you don't want it called away at 10, Why would you be selling the CC at that price? If you think it will go higher than 10 wait for that price increase or sell the 12.5 a few months out. That way you won't have to sweat it.

To: Patrice Gigahurtz who wrote (5955)	11/24/1997 7:13:00 AM
From: Ray Jahn	Respond to of 14162

It's my understanding that if the stock trades higher than the strike price anytime during the Friday before expiration (actually expires on Sat.) then you will most likely get called out. I was in the same situation once in WND the stock actually closed slightly under the strike price on Friday but was at least 1/2 point over strike price that morning. I was called out. Good Luck.

To: Patrice Gigahurtz who wrote (5955)	11/24/1997 10:28:00 AM
From: Herm	Read Replies (4) \| Respond to of 14162

Patrice, This can get confusing. The tax problems address the BUYERS of stocks and options. Little is said about the writers (sellers of options). "In general, the wash sale rule denies a tax deduction for a security SOLD (as a buyer selling his/her purchase) at a loss IF a substantially identical security, or an option to acquire that security, is purchased within 30 days before or 30 days after the original sale." That means that one can not sell AAAA to take a tax loss and also purchase AAAA within the 61-day period that extends 30 days before and 30 days after the sale. A call option is certainly, an option to acquire the security. It would thus invoke the wash sale rule for an investor to buy and then sell AAAA to take a loss and again purchase that AAAA call wihtin 30 days before or after the stock sale. NOTE! Various series of call options are NOT generally considered to be indentical securities. If one buys/sells AAAA January 50 CALLs to take a loss (by a closing sale), you may then buy ANY OTHER AAAA CALL option without jeopardizing the taxable loss from the sale of the AAAA January 50 CALL. Just DON'T try it again with the same call! FINALLY, if would also be acceptable for an investor to sell a call to take a loss and then immediately buy the underlying security. This would not invoke the wash sale rule. So Patrice, your AAAA to BBBB would not be considered a wash sale! You're situation is not uncommon to wait until Monday to "clear the books." Especially, since you are so close to being "in the money." If you are exactly on the dime you may not be called out! Next time, if you really want to hold on to the stock, go ahead and fork out the minor dollars to close your position. BESIDES, PLEASE, PLEASE, PLEASE UNDER WHAT I'M GOING TO SAY TO YOU! LESSON: Does it make sense to hold on to a CC when the majority of the profit is gone? It is like this, would you rather hold on to a 1/4 point CC for one week or cover for 1/4 and then sell another round of CC (rolling up one or two strike prices) for the next month for 1 point? 1/4 pt. vs. 1 pt. in your pocket? Don't sweat the 1/4 points! Go for the turnovers and take advantage of option time erosion working for you and against your call buyers!

To: Patrice Gigahurtz who wrote (5955)	11/24/1997 5:51:00 PM
From: David Beckett	Read Replies (1) \| Respond to of 14162

Patrice: Yes, I has it finish close & watched one get called and then reinstated by the broker with no intervention by me. It can even take until Tuesday, but not usually. Mostly, I hold my CC's through expiration. Lately, the underlying stocks have moved up, so that 3/4th of the time I get called. Rolling up to inflated prices has not been appealing. The damage has come from a couple of issues that I held, waiting for an upleg before CCing. Ouch, nasty surprise on MUEI last week. Other nasty surprise, I was in process of changing brokerages this month. The account did not complete the ACATS transfer before expiration, so now it would completely transfer until the called stocks settle in yet another 3 days ;-{ . Seems like eternity.