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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: Caroline who wrote (10000)	3/21/1999 10:24:00 AM
From: NateC	Respond to of 14162

Well Someone had to do it. so I'm going to try to be the 10,000th!!! Herm....you posted some great stuff on buying longterm LEAPS and CCing them. In the scenario where you own the 2001 CS leap, and have a Jun 1999 CC. I've forgotten your exact numbers.....but what I'd like to know is what happens if your Jun CC gets exercised.......does the brokerage automatically cover it with your long LEAP....and you get nothing for this...or do they sell the LEAP at market. In this case you paid about $3 for the long Leap.....and were getting income of about 1 3/8 on the CC. So if you get exercised.....do you still end up making the 40% (1 3/8 divided by 3).....or do they exercise the leap early, you don't get back your $3, and end up losing the difference (3 - 1 3/8) of $1.625???