Date: Fri, 13 Feb 2004 12:56:34 +0000 From: "Earl Smith" <t_esmith@hotmail.com> To: freebsd-ports@freebsd.org Subject: Writing covered calls Message-ID: <BAY8-F33WeUv8IuXGF40001660f@hotmail.com>
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I found a stock selling for 42.76 - this stock looks to be on the rise. The April 42.50 call last sold for 2.55. If I buy the stock for 4276 and sell the option for 255, my cost basis in the stock is 4021. If the option is exercised, it seems to me that I have 229 minus commissions. I think I recognize some of the potential shortcomings for this strategy - the stock might not rise enough for the option to be exercised, or the stock might fall, in which case I wouldn't be called; the stock might rise enough for me to have made more money buying the stock and selling it at a profit; I might not be able to find a buyer for the option. Are there some other pitfalls that I don't see? Thanks, Earl Smith t_esmith@hotmail.com _________________________________________________________________ Create your own personal Web page with the info you use most, at My MSN. http://click.atdmt.com/AVE/go/onm00200364ave/direct/01/
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