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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: Dan Duchardt who wrote (10671)	5/9/1999 10:52:00 AM
From: klemaire	Respond to of 14162

TO: Boston/Massachusetts option traders/option writers: We're organizing an Option Investor's trading club and will hold our first meeting on May 20 at 6 p.m. The Option Investor is sponsoring it but anyone interested in options can attend regardless of whether they subscribe to the Option Investor or not. I have talked to other Option Investor subscribers that have held meetings in their areas this month, such as Silicon Valley, New York City, Denver and Florida. The groups have drawn a fascinating and wide variety of experienced options traders plus some newer traders as well. At this first meeting we will discuss what we want the group to be, which objectives, etc. Some ideas that have already come up are potential visits to traders offices to see their systems and what they do, guest speakers, information sharing etc. Many people are interested in covered calls and we can perhaps form a subgroup that shares ideas, etc. Email me at kll400@aol.com for more details.

To: Dan Duchardt who wrote (10671)	5/9/1999 2:39:00 PM
From: tuck	Read Replies (1) \| Respond to of 14162

Dan, Here's a peek into my private finances :~} Buy 700 sh EDFY @ 8 1/4 $5788 Buy 300 sh EDFY @ 8 1/2 2563 ____ Nut 8351 Sell 7 MAY 7.5s @ 1 9/16 1060.18 Sell 3 MAY 7.5s @ 2 1/8 608.47 _______ Nut 6682.35 Had I stood pat here and been exercised: ($7500 - $6682.35)/$6682.35 = 12.2% Buy 10 May 7.5 @ 2 13/16 +2850.75 Sell 10 May 10 @ 1 1/8 -1086.71 ________ Nut 8446.04 Obviously, this includes commissions and dividing by 100 gets you the per share figures. Edify is currently at 12. If exercised now: ($10,000 - 8446.04)/$8446.04 =18.3% Actually closer to 18% because commissions aren't in these last figures. Now suppose EDFY goes to 13 in a couple of days and my TA indicates it's about to reverse. I would guess May 10s would be something like 3 3/8 and the 12.5s 2 3/8. If I stand pat, my downside protection is 4.5/13=35%. If I roll here, my nut goes up to $9.50/sh. If I'm wrong with my TA, and it keeps going, I get exercised for a return of 31%. It would have to go down 3.5 points or 27% for me to lose money. That's a plausible scenario, though. I could roll out to the June 10s for ~4 3/8, lowering my nut to 7.5, yielding a two month return of 25% and 50% downside protection before I lose money, which is pretty implausible. The question is, where will Edify be May 21st and June 18th? If I knew that, I'd be rich already. Compare these risk reward ratios to your plays, crew. Personally, I like the idea of rolling out to the June 10s. 12.5%/month ain't chump change, and I've had the excellent downside protection of in the money calls, the whole way. Another idea is to buy a few May 10 puts when it hits 13. Three of 'em would cost ~$200 at that point. But if the thing pulls back to 10, which is quite plausible, I lose that. The June puts make more sense, but would cost $400 for three. I prefer selling premium. Incidentally, I'm somewhat margined on this (a bit more than usual because of the good downside protection), and my returns would be roughly 1.5x those quoted here. I could go on, but I'll leave some of this for y'all to speculate on. Comments welcome. Note that Edify tops the charts right now at CoveredCalls.com! Cheers, Tuck P.S. My apologies for the formatting. WYSINWYG when responding, it looked OK in the draft, and I'm darned if I'm going to spend another 1/2 hour trying to get it just so.