My wife's retirment account has 11,988 Shares. I'm looking at using the CC strategy for her account. I have not used CC's in the past, but it is very tempting. So I write CC and buy back...Sell price minus cover = net profit.
your only risk of selling those Jan $20 cc for $2.10 or so is that gnw is HIGHER than $22.10 on the expiry date.
of course that also assumes you do nothing with the $21,000 cash it generates today. doubt you will not redeploy it somewhere.
that enough btw to buy 1500 more gnw shares at $15 and also sell the same call on them.
so those 1500 shares may also have to be sold at $20 or $30,000 which in effect raises the true selling price of the original 10,000 shares by another $3 from $22 to $25 or effectively its book value.
if you are happy with possibly selling those $15.50 shares for the $25 equivalent do the trades.
Yes, I know I'm selling..I have been reviewing the quotes as well. My brain is locked up with what ifs! I'm pretty well sold on your advice on my wife's retirement account and considerng my trading account as well.
Can you outline by example the risk (slim) this call option. We both believe this stock will go to BV in the next 2 years. I will read about options tonight.
jim- man you're killing me :) i did sell my other half today for 3.75% profit this week, can't answer the bigger question until i stack up the smaller ones.... like does my earlier theory have ANY validity? yes or no?
i read it but the bigger question is why you havent pocketed the $25,000 cash available to you all day?
are you waiting for the small profit you have on those 10,000 shares to dissappear on the mkt pullback that is taking gnw along with it.
all the strike prices i suggested were HIGHER than the the current stock price so its a no lose position for you to take.