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Looking at Market indexes
Hi again Mark. Though not specifically on the topic of options, market movement does affect their pricing. As I watch the markets each day the indexes (DJIA, NASDAQ, S & P) are almost identical tick for tick (a bit of an exaggeration here). How is ...
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Buying back Calls
Hello again. Hi Lance, I have been reading all of your posts per your suggestion from yesterday. This particular thread is interesting. If you have a stock that is rolling, say $25 30, you could sell the $30 strike when the stock is approx $30, ...
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Covered Call: What to do when stock falls rapidly by Mark Wolfinger on 06/10/2005
I just came across this article while trying to learn how to roll out of a covered call position. You mention that you buy back the call option. Technically speaking what is happening 'under the covers' here? 1) Does the brokerage put a hold on ...
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Calculating Rates of Return
Hello Mark, How do you calculate the rate of return of a covered call when legging in? I have owned the stock for some time and have made several purchases of this stock over time. Now I am selling a covered call and would like ...
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Exercising out of the money options?
Thank you very much my pleasure for the quick response Mark. Very informative and now I'm aware of the risks :) I have a friend who always dissuades me from covering out of the money options for a nickel or a dime as he says ...
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Exercising out of the money options?
Hi Mark I trade options by selling them and all this while I am unaware that out of the money options could be exercised. A friend of mine recently told me that it's possible although not probable this would happen. Is it true? I have ...
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Nice work.
Dr. Wolfinger, I just want to thank you for your well written site. I've got a Michigan JD, an MBA, and was formally a CPA. Your site is well written and easy to understand, yet it very clearly explains strategies and issues. Thanks, George Vrabeck, ...
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Calculating Rates of Return
If you sold a cash secured put, how do you calculate its rate of return and its annualized rate of return? Thanks - Barry Hello Barry, This is one of those things that different people choose to do differently. Here is the only method that ...
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Accounting for Covered Calls
Hi Mark, Our club owned 100 shares of MCD and (partly for the educational value) sold a March 2009 covered call (strike price of 52.50). This past Friday, March 20 (the expiration date), the option expired and since MCD was a little higher than 52.50, ...
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option exercise
If I buy a call option on March 20, 2009 1. Strike price of $20 2. Expiration date of May 20, 2009 3. The stock is selling for $35 on May 15 Can I exercise the call option and buy the stock on May 15 ...
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Covered Call: What to do when stock falls rapidly
Hello Mark, Hello Jorge, I've read your article: "Covered Call: What to do when stock falls rapidly" at http://www.bivio.com/know_your_options/mail-msg?t=77575400003 I really like how you write Thanks I try to keep it simple, cover all the details and not be too long-winded. and maybe you can ...
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can you tell me what this means
BAC Feb 2009 8.0000 call (CONTRAC.T_SIZE=100, 85 shares of BAC, 13.71 cash) (.JLWBL) The underlying security is from the merger of Merrill Lynch and BAC. Does this mean I will get 85 shares of BAC per contract if I chose to exercise? Yes. If you ...
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early exercise on index options
Hi I teach options at SUNY-Binghamton and was wondering how long an OEX index trader has after the close of trading to inform the exchange that he wishes to exercise an option. 4:15. 4:30 later or is it a grey area? It's not grey. There's ...
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covered call option writing
Hi Mark, New to this area, in a article you wrote about covered calls, you cautioned the reader that there was increased risk if the price of the stock went down. If I own 100 shares of XYZ and I write a covered call, if ...
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Re-selling vs Exercising stock options
Hi Mark: Hello Irene. I am very impressed with the answers you give to the questions. This is exectally what I have been looking for in trying to understand the action of options. Thanks. I'm happy to help. What is the difference between reselling a ...
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