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  • wiseinvestorafterduediligence wiseinvestorafterduediligence Apr 8, 2009 12:12 AM Flag

    Should I buy BAC and sell calls in an IRA?

    The 115% computed in the post is annualized return.

    You will thus double the value of the account plus 15% so long as you can continue to successfully repeat the strategy every 3 or 4 months.

    The problem with the strategy is that it limits your gains.
    If BAC were to rise above $10.50 by August, you don't benefit beyond that value. In essence is it actually a conservative approach but limiting.

    If BAC were to rise to $20.50 by the 3rd Friday in August, you'd lose $10 of the gain, (but still have annualized gain of 115 percent). If for example, you bought today and sold for $20.50, you would have an astronomical annualized gain of about 462 percent.

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18.13-0.03(-0.17%)4:00 PMEDT