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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: jim#2 who wrote (7887)7/14/1998 8:14:00 PM
From: Mike Fredericks  Read Replies (1) | Respond to of 14162
 
Dell closed today at 107 3/8
Buy Dell LEAP Call JAN 00 100 39
Sell Dell Call AUG 98 110 6 7/8

Jim-

Given Dell's constant running up, there's an excellent chance of getting the shares called from you in Aug '98. If the stock is > 110 in August, and you get called, what do you do? It's too expensive to exercise the Jan '00's, so would you buy back the Aug call?

Thanks,
-Mike



To: jim#2 who wrote (7887)7/18/1998 8:34:00 AM
From: Joe Waynick  Read Replies (1) | Respond to of 14162
 
jim#2, sorry for the late reply. I would have started by buying the Aug 110 instead of the 100 -- too expensive. Then I would write the 115 or 120. If the strike is reached you can use the appreciation of your long call to pay for closing the position.

For a stk like DELL, I think bull put spreads would be a better strategy.


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