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Abbott Laboratories Message Board

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  • snugly60031 snugly60031 Apr 17, 2006 10:07 AM Flag

    Snug-Please Explain ABT Covered Calls

    Plute,
    Currently Jan '08 $30 call is $13.40. Very little premium vs. buying nearer term options that are at strike price or out of money. Snug

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    • Plute,
      I didn't see The Street Com article when I wrote this. IMO there is a lot of money being made by covered call and naked put writers on ABT. I suspect they somewhat manipulate the stock price, especially near expiration. That is why I believe the stock will likely close this week very close to $42.50. With sufficient time, though, this stock will move higher and lower around a mean point. So you should be able to profit if you can purchase longer term options at minimum premium at extremes of normal range to benefit from movement in opposite direction. Snug

    • Snug-Assume that means $13,400 to bet ABT will payoff by Jan 08 in which I could buy 1000 sh @ $30 each? If ABT < $41.50 by Jan 08 I lose $13,400? Still confused.

 
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