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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: wlheatmoon who wrote (46594)	2/11/1999 2:00:00 PM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

(got an option and premium question. want to sell JNJ covered calls. Can get April 85 for 3 5/8. July 85 for 6 1/8. Which one and why? Anyone?) It all depends on whether you want to have the stock called away (and produce a taxable event) and what you expect the stock to do. I would look at the March 85's and at all the 80's. If you go out beyond 4-6 weeks the average rate of time value decay is low and you don't get the multiple chances to re-write which really boost the rate of return. If you don't expect the stock to hang high for re-writes, then you should be writing in the money, if not selling. JMO. Good Luck, Don

To: wlheatmoon who wrote (46594)	2/11/1999 5:49:00 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Mike, I vote for July. Always take in as much absolute time premium as possible up front. Yes, it does not annualize as well over the course of the year, but your ability to annualize depends upon the stock staying flat, the least likely scenario. In an up market, you do better because you can unwind that larger premium early. In a down market, you have more protection. In fact, I think June is too near term and I would go out to Sept or Dec or Jan of 2001. MB