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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: High-Tech East who wrote (10784)	8/7/1998 2:53:00 PM
From: Shawn M. Downey	Read Replies (1) \| Respond to of 64865

If I did as you suggest, does that mean that I pay $2,500.00 for the right to purchase 1,000 shares prior to the call date in January at $60, and that, if we assume that the market price is $70 in January, that I would gain 1000 X $10 = $10,000 minus the 2,500.00 I paid for the calls. So I would be betting $2,500 against the possibility that I could clear $7,500 ..... if SUNW rises $20 plus or minus between now and then. No. He said you would sell (short) these calls. You would receive (up front) 250.00 per contract. This is usually no problem if you are covered (that is you have 100 shares for each contract sold). Otherwise, you must have certain rights with your broker to sell "uncovered" or "naked" calls. The covered example is a "moderately bullish" position. You would like the stock to rise but your stock gets called away if the rise exceeds 60. Thus, your max profit is made when the stock hits 60. You do not benefit further above 60. UPDATE--- The bid/ask on these C JAN 99 60's is 2 and 2 3/8 respectively