Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Advanced Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: Herm who wrote (32)	7/13/1998 9:20:00 PM
From: Joe Waynick	Read Replies (1) \| Respond to of 355

Herm, thanks for your response. However, let me clarify . . . I understand your logic. You buy a $30 LEAP for $10. You write a short term (30-day) CALL at $35 or $40 and collect say a $1.50 premium. That would be a return of 15% monthly return if the short term CALL expires worthless. If not, your broker assigns the CALL you sold and exercises the LEAP you purchased. Of course, since the stock went up to say $35, the LEAP is worth more than $10 and you profit the premium as well as the appreciation on the stock. If the strike price is reached prior to expiration, there's really not need to wait. Just close the position and start again. You are in fact covering your short call with your long call LEAP. See, I come around eventually! You might also mention that McMillan considers this a potentially profitable, but certainly high risk strategy!