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Thanks John. Interesting site,
<FONT
face=Arial>http://www.optionsnewsletter.com
but just looking
at one random recommendation:<FONT face=Arial
color=#800080 size=3>Covered Call: 1
<TABLE borderColor=#ffffcc cellSpacing=0 borderColorDark=#509ce1 cellPadding=2
width=491 bgColor=#ffffcc borderColorLight=#ffffcc border=1>
Name of the Company
Take-two Interactive S
Stock Symbol is
<A
href="http://www.optionsnewsletter.com/page.cfm?id=145&page=customizer&ticker=TTWO"
target=_self>TTWO
Last Price of stock
$27.63
Call being sold is
March 17.5
Symbol for the call is
UOCW
Bid Price of the call
$11.30
IN PLAIN ENGLISH
If you buy 100 shares of Take-two Interactive S at the
price of Then sell 1 contract of the March 17.5 call
for Your "New" cost on Take-two Interactive S would
be
$27.63 -
$11.30 $16.33
( $2,763.00 )( $1,130.00 )
( $1,633.00 )
On the third Friday in March if the stock is above 17.5 , Then it
will get taken ("Called") away from you at $17.50. In turn you would make
7% on your investment.
Above, that $17.50 option is a full $10 in the money. Consulting the
options quote:
<A
href="http://quote.cboe.com/QuoteTable.asp?TICKER=ttwo&ALL=2">http://quote.cboe.com/QuoteTable.asp?TICKER=ttwo&ALL=2
There's zero open interest in that particular
option, and even though the bid shown is $11.30, I wonder how realistic
that quote will be if you actually try and execute the trade?
When I look at this trade, can't help wondering if there isn't a
better way to earn 7% on my money? I also think that any service that
makes recommendations should filter out very thinly traded options, say,
restricting their choices to strikes that trade an average of 100
contracts/day.
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