Top Covered Call UAUA/12.5/Sep'08

Discussion in 'Options' started by Kash, Aug 20, 2008.

  1. Kash


    Hi Experts,

    With UAUA, Sep'08 expiration 12.5 Strike Call, around 10:40AM today,

    Static Return 17.34%
    Return on Assigment 21.94%
    Lower Breakeven 10.25
    Stock ask 12.38
    Option Bid 2.15

    Isnt that a good money? I mean what reasons we should think before going after such a trade?

  2. Kash, the main risk in the covered call (assume you own the stock) is a major tank of over $2. It could happen given the problems UA is having right now. If you think the stock will actually stabalize then sell the straddle. (oh.. and dump the stock)
  3. Kash


    Thanks for the response Richard!

    As you said, Short Straddle looks even better!
    as per

    A straddle on UAUA, at Strike 12.5, Exp. 09/20,

    Max Profit - 405
    Lower B/E - 8.45
    Upper B/E - 16.55

    Thats an 8.10$ range, with around 4$ on each side. Position will expire by 09/20, i.e. within one month. But the news on UAL.. hmm...