In the money covered call - RIMM

neophytenate · Dec 27, 2007

Quote from newguy05:

Well the man is brilliant, atticus is like mozart in options, usually i was able to grasp what he is saying after rereading it a couple times and type it out on notepad, but this one just cant understand no matter how hard i try.

The OP sold covered call at 115 strike at $4.24 with a cost basis of $104.4. Now the call is at $14 and stock at $124.55. So if he:
1) cover the short, sell the stock NOW, will have a profit of ~$10 per share.

2) wait until expiration, will save ~$4 on time premium, but risk the underlying drops lower while waiting. If underlying stock drops to $110 at expiration, he will make the same $10 as 1).

3) sell the stock, keep the option. Then wouldnt he have naked short call position then? I dont understand how this is a good idea considering RIMM is pretty hot right now
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What atticus prposed was selling an additional call for a ratio write. This is equivalent to a short strangle.

neophytenate · Dec 27, 2007

Quote from Matt24SPFL:

Talking to atticus about options is akin to discussiong relativity with Einstein..
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Come on ... talking to Einstein ain't that hard.

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In the money covered call - RIMM

neophytenate

neophytenate