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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: Herm who wrote (7868)	7/11/1998 11:13:00 AM
From: Vol	Respond to of 14162

Herm, Re: index calendar spreads How is this logic? Using the OEX, index of S&P 100, buy a long term call or LEAP. Then sell shorter term calls, as you have discussed doing with individual stocks. Premies may not be as large, since an index can't have as much volatility as a single equity. However, you don't have to fear bad earnings, early warnings, short sellers and other manipulators, etc. The only thing to hurt you is a big drop in the market, which would bring all stocks down anyway. The way I see it, you give up a little premie in exchange for a little stability. Similar to selling CC's on MSFT or IBM, as opposed to VVUS, IOM, EGGS, UGLY (or any other gut-wrencher you can think of). BTW I haven't done all my DD on this; I'm just thinking out loud. Vol

To: Herm who wrote (7868)	7/11/1998 4:05:00 PM
From: Bill/WA	Read Replies (2) \| Respond to of 14162

Herm & all, Could you comment on this post from (news:misc.invest.options) WH Ford from the Pitbull.com? "Buy 100 contracts, $5 out of the money, @ $.35 each = $3500 1.) An at the money strike, the option will move about $.50 for every $1.00 the stock moves. 2.) At $5.00 in the money, the option will move about $.75 for every $1.00 the stock moves. 3.)At $10.00 in the money, the option will finally move close to parity with the stock. That means that the stock MUST go up at least $1.50 JUST TO PAY FOR THE PREMIUM ON YOUR 35 CENT OPTION BEFORE YOU ARE EVEN IN A POSITION TO MAKE A SINGLE PENNY." I'm a little 'slow on this' or my mind is drawing a 'blank'. Is there another way to explain this?? Thanks in advance for the best site on SI, Bill