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  • ktstocks ktstocks Feb 2, 2005 11:34 PM Flag

    Sell my Feb calls? life savings. HELP!

    Covered calls is when you own the stock and sell the call using the shares as collateral. You want to look at credit and debit spreads.

    I would suggest that you get out of the furthest OTM options if yu get a pop in the next two days. You don't want to and have the time decay go against you over the weekend. Also set up your credit spreads ASAP.

    Here is an example of Bear call spread:

    "Call credit spread


    Call credit spread - An option spread position where the profits are spread between the premiums.

    For example:

    If you buy 10 XYZ June 90 call options at 5,

    And write 10 XYZ June 80 call options at 9,

    The credit = 4.

    The maximum gain is the net credit.

    The maximum loss is the difference in the strike prices less the net credit.

    The break-even point is the lower strike plus the net credit."

    Yes you can own one strike price and sell another, but you must have enough in your account to cover margin to do so. Rememember your margin is the difference in strike prices time $100 per contract.

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