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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: Matthew B. who wrote (6046)	12/7/1997 3:25:00 PM
From: Greg Higgins	Read Replies (1) \| Respond to of 14162

Matthew B. writes: From your experience, what proportion of CCs have been exercised early, and on average, how early? Well none, actually but that doesn't mean I don't consider the possibility in every trade. Remember, I look for security, return, repeatability. I'm just not in the habit of having my stocks rise 18% the same week I buy them. If I knew how to do that consistently, I'd be a call buyer, not seller. The golden pie as Patrice put it. The same time I was selling JUL 130 calls for 14, DEC 140s were selling for 5/16. The DEC 140s now sell for 3. 900% is not bad for a weeks work if you can do it consistently. I can't, that's why I don't. Maybe it will be OK in this case too. Maybe the stock will drop and not go to $150. I certainly expect to get called away early at $150. If not, time is on my side as always. Even if it stays at 140 between now and Jul, eventually the premium will degrade to $10 (i.e., on the Friday prior to expiration). I might at such a point decide to buy it back and sell a new call. I only really lose if the stock breaks completely between now and then and I consider it unlikely unless the entire market breaks.

To: Matthew B. who wrote (6046)	12/7/1997 4:23:00 PM
From: hpeace	Read Replies (1) \| Respond to of 14162

early exercising on options rarely happens even if a put or call is well into the money. but, on dividend stks the exercise rate is higher. infact when I was cc'ing Nynex to learn how to cc..100% of the time if my cc was in the money..I was exercised on ex-devy date. of course you don't find out til it's too late so you miss the divey. SO, what I would do is is I had 10,000 shares of Nynx. and I had a call in the money on ex-date..I would buy another 10,000 shares that day to make sure I had my 10k shares at close that day. make sense????