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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: R. Gordon who wrote (6291)	1/5/1998 11:58:00 AM
From: Greg Higgins	Read Replies (1) \| Respond to of 14162

R. Gordon writes: If I buy a leap and sell the short term call on it, if the price of the stock goes up and I choose not to cover my position, how does the money all get settled out at expiration? I would assume that I would have to sell the leap to cover the difference. The one problem with LEAPS are that they are not marginable. You could exercise them, or you could sell them to get money to buy the stock you owe. If you have sufficient margin, you can short the stock. You may be able to go short against the box using the LEAPS as the box for your short stock. This might be allowed with little or no additional margin. Then when (or if) the stock returns to more reasonable levels, you buy to cover, and then look for opportunities to write calls against the LEAPS again.