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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 (10096)	3/27/1999 1:13:00 PM
From: NateC	Respond to of 14162

tuck and Dan....thanks for your clarification of this. I'm probably guilty of perpetuating this idea. It is direct from Cook's book....WS Money Machine.......(where he says that certain brokerages with a Buy-Write......will sell you the call at the Ask) I did check it out with a broker friend....who said he thought some full service brokers would do this. but the in depth discussions here have proven that this thread...coupled with mcMillan's book.......gives you the best learning experience. Again thanks for your insight

To: tuck who wrote (10096)	3/27/1999 1:22:00 PM
From: NateC	Read Replies (2) \| Respond to of 14162

If a stock is selling at $50 and the call is selling for $4, an investor can specify a position of net $46. So if the stock moves before your order is executed, you still pay $46 for the transaction if the stock goes to 50 1/8 and the option goes to 4 1/8. If in fact the stock were: bid 49 7/8 ask 50 1/8 and let's say the 55 call was: bid 1 1/2 ask 2 to buy the stock, you'd buy at the ask, as usual..paying 50 1/8. do I understand that a buy-write buyer/seller...could call the broker...and if he/she said he wanted NET 48 1/8 (....he would in effect would be saying...."OK..I'll buy the stock at the ask of 50 1/8..and you sell me the call at 2"??? In which case the MM could play with it..by, for example,....buying the stock at 50, and selling the call at 1 7/8.....which would give this theoretical buyer his NET of 48 1/8. Is this how it works? The net 48 1/8....could be arrived at several ways..by the broker....50 - 1 7/8, or 50 1/8 - 2....etc.