[Selling Call against SPY LEAPS/Selling to Open the Dec '06 125 Calls (CYYLE)/Day Order/Limit $7.50]
Dear Member,
I am creating a covered position by selling the Dec '06 125 LEAPS Calls (CYYLE) for $7.50 a share. SPY looks like it is weakening right now, so I can bring in some income and actually assure a profit at expiration if I do nothing else. The profit I am assuring is in concert with the Dec '07 115 calls (FYNLC) I already own. I bought the Dec 115's for $17. If I am called out at $125, I make $10 on the stock and I am now taking in another $7.50 by selling the 125 calls. If I do nothing until expiration, I will have gotten $17.50 and paid $17 (all exclusive of commissions). $0.50 on $17 is a 2.9% gain, better than a bank account, but not what I really want. I don't have to worry about a loss if I do nothing, but I very well may be able to profit by buying back the calls I am selling today at some later date at a lower cost, take that profit and do the whole thing over again, and again.
DISCLOSURE: At the time of publication, I own LEAPS calls on SPY including the Dec '07 115 calls.
Sincerely,
Bill Kraft for
CutLoss, Inc.
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