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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: NetBuyer who wrote (9435)	1/12/1999 8:17:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Wow NetBuyer! What a surprise. Just remember, only about 7% of stock brokers has the extra license for options. Those fellows would not be working for a discount broker if they knew anything. That is not to say there are not some sharp discount brokers. I've had my run in with some of my brokers where I explain trades I made that did not violation of "A Free Ride." That's when you trade in/out in less than three days before "settlement." I purchased the stock on margin which technically means I paid cash for the purchase. I pay the commissions in and out and these guys sometimes allow me to do it. Other times they slap me with a 3 month penalty. Meaning, no three day grace! The last run in with them was about writing CCs against LEAPs. In other words, spreads. They tell me I can do it and when I tried they indicated that they don't allow that because I'm naked! Heck I am. I had the long stock unmargined and the long lower strike price calls and short calls balanced out. All cash purchased positions. I'm looking for a more option friendly brokerage. Thanks for your story!!!

To: NetBuyer who wrote (9435)	1/12/1999 9:55:00 PM
From: VincentTH	Respond to of 14162

NetBuyer, CBOE has a daily mailing list which detailed what happened to options when a merger/acquisition occurs. Check their site www.cboe.com. I don't know about cash, but the options are converted based on the merge ratio. A contract for 100 shares of MCI @60 would be converted to 124 of WCOM shares with a strike price of 60/1.24 = $48.387 (48 3/8). So for every contract, you would deliver 124 shares of WCOM plus the cash amount. The call premium are high only because the strike price should be adjusted down. To make it short, check with the CBOE.