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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: David V. Lott who wrote (7044)	3/6/1998 6:03:00 PM
From: Douglas Webb	Read Replies (3) \| Respond to of 14162

Assuming you don't own NTAP yet, and are bullish on it, you have a few options: Buy-Write: Buy NTAP @ $30 1: Write APR 30 Call: You'll get a 6% return whether you get called or not. Your breakeven at expiration will be $28.25 2: Write APR 35 Call: You'll get a 19% return if called out, but your breakeven is only $29.3125 3: Write JUN 27.5 Call: You'll get a 7% return if called out, and your breakeven is $25.3750. This is a little better than #1, but you have to wait two more months. 4: Write JUN 30 Call: You'll get 11% if you're called out or not, and your breakeven is $26.6250. This is probably better than #1. 5: Write JUN 35 Call: 22% if called out, breakeven is $28.4375. This is better than #2, if you're aggressive. Bull Put Spreads 6: If you think NTAP will be above $35 by June, the best BPS is the JUN 25-35 spread, with a return of 167% and a breakeven of $28.75. 7: If you think NTAP will be between $30 and $35 by June, the best BPS is the JUN 25-30 spread, with a return of 167% and a breakeven of $26.88. This is a better deal than #6. 8: If you think NTAP will be between $27.50 and $30, go for the JUN 25-27.5 spread. The return is 344%, and the breakeven is $25.56. This looks like the best deal of the bunch. Of course, I'm not recommending any of these, because they all depend on a bullish outlook for NTAP, which I know nothing about. If you're willing to bet that NTAP will at least hold $30 for 3 months, #8 looks like a good deal. Doug.