Sharing+Discuss Option Trades/Strategies

When you use the phrase "covered call" it implies you own the stock. yes you get to keep the entire premium but you will lose 2 dollars and change when you are assigned on the 5 strike call which in the real world needs to be accounted for.

Obviously the "news" in this case will be a significant force in the future of the company and will have a major impact on the price of the stock.
 
Quote from travelboysteve:

Xflat and Atticus,
Sorry, maybe there is some confusion here.
Maybe I need to mention I own the stock, not the options. Does that make more sense?
For clarification:

I bought, ( in 2 entries), xxx shares with a cost basis of $7.10.

I have received, and will get to keep the option premiums, ($3.20 each) I collected for selling the $5 calls against the stock.
it's not hard to see why I don't care about the options technicals because I don't own them.
So now we are left with only 2 things happening come June 19th, either the stock will be below $5 or it won't.
Again, this is a small position I have that I saw an opportunity.
I am also armed with other management strategies, if, in fact the stock goes wacky on the news.
To me, news is noise and I wouldn't hang my hat on news in this market.
Look what happened a week or so ago,....whoda thought the market would rally on bad news?...:confused:
More...

If "called" you will be "assigned" from $5.00. The call grants the buyer the right to own stock from 5.00, not 7.10. You're required to deliver shares at 5.00 [sold to OCC], not your cost basis on shares.

If called, 7.10 less 5.00 = 2.10 loss on shares; yet you keep the option premium of 3.20. 3.20 less 2.10 = 1.10 gain provided shares expire >strike.
 
Atticus,
You sound angry,.....breathe and relax,....
my math is fine.
If you believe that 3% compounded is 36% annually, well, I can't help you.
If, anyone still thinks that 1.1 divided by 3.9 is not 28.20512805 %, well, maybe they need new batteries,......
This is supposed to be a productive post about sharing ideas and strategies without being obnoxious or demeaning.
We all can continue to learn.
It is the closed minded person that believes they have reached a point they can learn no more.
I personally appreciate all constructive criticisms, but personal attacks or insults do nothing but clarify the true nature of a person.
There is an old proverb that simply states:
"it is better to be thought a fool, than to open your mouth and remove all doubt".
PM and myself are just having simple banter about certain items,.....I would appreciate questions, rather than assumptions, just maybe, I'm only new to this forum, and not to the market.
Cheers, Steve
 
Quote from atticus:

If "called" you will be "assigned" from $5.00. The call grants the buyer the right to own stock from 5.00, not 7.10. You're required to deliver shares at 5.00 [sold to OCC], not your cost basis on shares.

If called, 7.10 less 5.00 = 2.10 loss on shares; yet you keep the option premium of 3.20. 3.20 less 2.10 = 1.10 gain provided shares expire >strike.
More...

Atticus,
That is right,.....and since I only have a share cost basis of $3.9 as of right now, collecting $5 per share on June 19th does not sound like a bad idea to me.
your thoughts?
 
Steve,

The problem lies in that you're profit calculations are grossly misrepresented as has been pointed out by myself and atticus.
 
Quote from travelboysteve:

Atticus,
You sound angry,.....breathe and relax,....
my math is fine.
If you believe that 3% compounded is 36% annually, well, I can't help you.
If, anyone still thinks that 1.1 divided by 3.9 is not 28.20512805 %, well, maybe they need new batteries,......
This is supposed to be a productive post about sharing ideas and strategies without being obnoxious or demeaning.
We all can continue to learn.
It is the closed minded person that believes they have reached a point they can learn no more.
I personally appreciate all constructive criticisms, but personal attacks or insults do nothing but clarify the true nature of a person.
There is an old proverb that simply states:
"it is better to be thought a fool, than to open your mouth and remove all doubt".
PM and myself are just having simple banter about certain items,.....I would appreciate questions, rather than assumptions, just maybe, I'm only new to this forum, and not to the market.
Cheers, Steve
More...

I sound angry? Odd, I didn't realize my post made a sound. I never mentioned your compounded return, which is meaningless. You're intent on remaining delusional regarding the payout of a simple covered-call. I've corrected you twice, and that's my limit. Please continue to remain blissfully ignorant to the risks.

The SVNT covered call cannot earn more than $1.10.
 
Quote from travelboysteve:

Xflat and Atticus,
Sorry, maybe there is some confusion here.
Maybe I need to mention I own the stock, not the options. Does that make more sense?
For clarification:

I bought, ( in 2 entries), xxx shares with a cost basis of $7.10.
More...


Are you now ammending your story to read your cost basis as something other than your original post of $7.10?
 
Quote from travelboysteve:

Atticus,
That is right,.....and since I only have a share cost basis of $3.9 as of right now, collecting $5 per share on June 19th does not sound like a bad idea to me.
your thoughts?
More...

You stated your cost-basis is 7.10. Please don't waste my time. Mods, we can assume that Put_Master and Steve share an IP address.
 
I'll just let the chips fall where they may,.....
atticus and xflat,
I appreciate you input(s), but you both have proved my point implicitly.
I am sure the both of you are fine traders and perhaps know quite a bit about this industry.
I make no representation, nor do i suggest stock picks.
This position is one I have, along with many other people.
Assuming I am called out which I believe will be the case.
I will get $1,10 per share profit for each share I own which is currently $3.90.
Maybe I am missing something.
But if I get $1.10 on top of a cost basis of $3.90, how is that not 28% return?
If, for example, I have 100 shares right now, that I am fully invested, cash out of pocket at $390, and at expiration I am called out I get $500, how is that a bad thing?
please advise
 
Quote from atticus:

You stated your cost-basis is 7.10. Please don't waste my time. Mods, we can assume that Put_Master and Steve share an IP address.
More...

No, I stated I purchased the stock with an overall cost basis, BEFORE, I sold the calls,....maybe check the post again,....
and no, I don't know who PM is,....
 
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