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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: tuck who wrote (10073)	3/26/1999 10:22:00 PM
From: Dan Duchardt	Read Replies (1) \| Respond to of 14162

Perhaps I'm being dense here, but I'd like to pursue this question so I can understand the motivation of a broker who is willing to do a Buy-Write and give you the bid-ask spread on the call. I understand why a client would want to do this: the desired price improvement, combined with the safety of simultaneous execution. But what is in it for the broker?? My experience with brokers is not as extensive as many of you I am sure, but I have not found them to be overly generous. I can't imagine them sitting there waiting for your order with buyers willing to pay you the asking price, unless they are short inventory and don't want to write the calls themselves (not allowed to??, I'm far from being the expert here) and don't want to tip their hand by showing what they have. If they do have buyers willing to pay the ask, why else would they not have filled those orders already. So my question is: Who is going to buy your calls at the ask? The only answer I can come up with is that in most cases it would have to be the broker himself, and the only reason I can see why he would do this is if he believed the price of the call was going up, in which case you would be better off waiting for the higher price yourself. I can't imagine him doing this for you if he doesn't think he is going to make money from the deal himself. So I'm here scratching my head thinking what broker in the world would guarantee you a Buy-Write every time you wanted one, and why? And if he says he will do it some of the time, I'm thinking if he tells you he will do it, you really don't want him to. Would appreciate someone enlightening me here.