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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (4352)	1/7/1998 10:52:00 AM
From: Magnatizer	Read Replies (1) \| Respond to of 10921

Zeev Great call on the market this week. When you write covered calls are you writing deep in the money ($5+) and long term (4 months+). Just learning Thanks David

To: Zeev Hed who wrote (4352)	1/8/1998 3:39:00 AM
From: John Nobrega	Read Replies (2) \| Respond to of 10921

>I just move into cash and write covered calls, sometime deep in the money, on core positions. < Zeev, I'm not an options guru, but I can see no redeeming value in writing covered calls deep in the money. You might as well sell the stock position outright and collect interest on the cash. It seems to be a higher risk/lower reward strategy that writing covered calls at the money, where the return is higher and the risk is lower. Maybe I'm misinterpreting what you are saying -- do you mean deep out of the money? Here's an example: AMAT closed at 29 today(1/7). The July 30 calls are priced at 5. July 25 calls at 7 5/8 and July 35 calls at 3 3/8's. Which would you choose to cover with and why? I would write the July 30 calls at 5. If the stock goes up, I deliver the shares at 30 and lock in $5+$1) profit. If the stock doesn't move, I keep the shares and lock in a $5 profit. If the stock goes down, I get to keep the $5 and the shares, so breakeven is at $25, effectively reducing my cost of the original stock purchase. Just Curious,