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Abbott Laboratories Message Board

  • plutothecat_17 plutothecat_17 Apr 17, 2006 9:58 AM Flag

    Snug-Please Explain ABT Covered Calls

    Snug-Read Dykstra "Hey Abbott" Lennie describes buying control of 1000 sh ABT for 4-months for $6900 using in-the-money covered calls. Assume Lennie thinks ABT "under appreciated" will rise and he then buys them @ $35 I assume? Please explain, I never used Puts or Calls. Thanks Plute PS- Persh- Take a gold break we don't care except Phy.

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    • 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

      • 2 Replies to snugly60031
      • 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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