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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: joe who wrote (24283)	11/10/1998 1:59:00 PM
From: James A. Shankland	Read Replies (1) \| Respond to of 45548

yes, [writing covered calls on COMS] seems to be a strategy that has worked well for a lot of people. What will you do if COMS jumps in the money for your nov 35 calls, and your shares get called away? Will you still rebuy your shares back? I'll echo that writing CC's on COMS has been lucrative. I've had COMS for maybe 18 months, and am about at breakeven on the stock itself; but I've probably made about $15 on the CC's in that time. As for what one does (not speaking for Deepak, of course) if COMS jumps into the money: it really depends on whether you think the stock is fully valued or not. If so, maybe you let it go. If not, you roll the short call position: buy back the Nov 35's and then sell Dec 37.5's or Jan 40's, or something. It depends on how bullish you are on the stock short-term (1-3 months): if you're quite bullish, you keep your short calls well out of the money (e.g., Dec 40's); if you're less bullish, you write your calls near the money (e.g., a Jan 35).