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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: JimsJeeps who wrote (10556)	4/28/1999 4:17:00 AM
From: NateC	Respond to of 14162

I am still trying to grasp using the leap as a stock surrogate, so please bear with me. In the example you sited, you bought the $40 Jan 2001 leaps at $20 and sold the $55. calls at $2.50, are you not in for a $2.50 loss if you are called out? Am I still confused as to how to calculate the profit or loss? Thanks for your help, Jim. JimsJeeps.....the idea here is not to get called out, unless you know exactly that your broker is going to take good care of you. broker could close your spread out....by selling the long calls you bought (LEAPS)/....at market...and they might be worth, say, $22..since the stock advanced to $55...so you'd make a little on this end... if they just exercised them on you...you could lose big time....so the strategy would be gto "repair" ala McMillan...and roll out and up