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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: the options strategist who wrote (7583)	6/10/1998 12:01:00 PM
From: Douglas Webb	Read Replies (1) \| Respond to of 14162

Doesn't this assume one already own 500 shares of the underlying stock? Yes it does. Herm's giving an example of a Recovery Spread, which assumes that you already own shares of a stock, and want to increase your return on it faster than you can by just writing calls. By buying enough long calls to effectively double your stock position, you can write twice as many short calls against it. You can often do this for a credit, so it's a very low-cost way to improve your position. You can check out the spread on my stock page: webbindustries.com Go into the recovery spread page, and click on the little graphs; I put in a reasonably detailed graph and explaination of the position on the page that will come up next. Doug.