[RT] Selling Uncovered Puts

[John Cappello <jvc689@xxxxxxx>]

Gary,

You are correct in many respects...but I just use it as a screening 
site. Some interesting companies pop up. Quite frankly I would never 
buy a stock just to sell a covered call on it. I do however 
frequently sell covered calls on stocks in my portfolio.

I do not think the amount made is  annualized so the true return if 
done would be higher if trade worked.

As far as thin goes I was 90% of the market in the Sears $22.50 '03 
put and I got my price.So I would not rule out getting the price.

Sincerely,

John



------------------ Reply Separator --------------------
Originally From: "Gary Funck" <gary@xxxxxxxxxxxx>
Subject: RE: [RT] Selling Uncovered Puts
Date: 10/21/2002 07:10pm




Thanks John. Interesting site,
http://www.optionsnewsletter.com
but just looking at one random recommendation:

Covered Call: 1
      Name of the Company
     Take-two Interactive S

      Stock Symbol is
     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:
      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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