ETFC Jan10 $5 calls

Discussion in 'ETFs' started by morreo, Oct 13, 2008.

  1. morreo


    Bid 1.20
    Offer 1.25

    Good covered call play or best covered call play?

    There are so many arb opportunities with those. Make a spread on the Jan11 calls. Spread against the Jan10 $2.50 calls.

    Covered calls gives you HUGE insurance in case stock goes down and gives you a pretty good upside.
  2. You are ignoring the possibility that this company is kaput.

  3. Only if the call premium is greater than the strike price! :cool:
  4. OP, this is not worth it. You are far better off just buy the stock.

    buy when it hits 2-2.5, sell when it hits 3.5-4, you can do that back and forth all year long until the etfc book is cleaned.
  5. morreo


    Or you can buy the stock at 2.18, sell covered calls at $1.20

    Then ride the stock up to $2.64 while the calls decrease to .95 like I just did. Am I the only one that saw the price extremely out of line with the other calls around it?

    Besides if you are afraid of the company going kaput, you could had made like a 10-20 cent spread with the $2.50 calls. Extremely cheap for that kind of play. I guarantee that spread will be 60 cents in days.