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To: XiaoYao who wrote (17625)	2/24/1998 4:24:00 PM
From: miraje	Read Replies (1) \| Respond to of 24154

YuanQing, Selling covered calls is in reality a conservative strategy. Timing is the key to maximize gains. If you feel a big run-up is nearing a top, such as MSFT is doing now, IMO, selling out of the money calls can generate extra cash with minimal risk. Several scenarios can result. If the stock corrects from current levels, you can buy back your calls at a lower price to close the position and pocket the difference as profit. If you wait until expiration, you keep the entire proceeds from your sale. If the stock continues to run up and goes over the strike price you will have to buy back the calls if you want to keep your shares. This would indeed result in a cash loss, but would be more than offset by paper gains in your unsold underlying shares. Also, remember that time premiums evaporate rapidly as expiration approaches. Hope this helps answer your question. If any of this is confusing, let me know and I'll try to further clarify. Regards, JB