Which IT Outsourcing Company Gives Maximum Return on Covered Calls? [View article]
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Dan, dude, what the heck are you talking about?!?! You can't ignore time value of money "assuming" that one will hold a stock for the next six months and that capital losses in that time will be erased!!!! The central idea with options is that there IS a time value to ownership and capital. Jeez, man, quit it with the inane ramblings, you're just embarrassing yourself.
Of course Satyam looks great in your "analysis". You used a high strike price and ignored all the other variables!! Here's another look at your "analysis"--
Stock price on June-25 $24.50 Call premium for $25 for Jan-08 = $2.60 If one buys 200 shares one would invest $4,900 Max return is ($2.60 * 200) + (($25 - $24.50) * 200) = $620 = 12.7% Min return is $2.60*200 = $520 = 10.6%
THE ACTUAL MIN RETURN IS: -4,900 + ($2.60 * 200) = -$4,380 IF THE STOCK GOES TO $0.00
Dan, you can't IGNORE the value of the underlying stock. You can't ignore time value of money--of course if you pick a $30 strike price you will make "more money" at the "max". If you had run the analysis with a strike price of $50, you would have calculated an even greater "max" return.
This is beyond sloppy, it's just ignorant. Please try to understand what you are saying befor you say it.
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Jun 26 13:41 pm
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All Comments by Ciba Gator »Which IT Outsourcing Company Gives Maximum Return on Covered Calls? [View article]
Dan, dude, what the heck are you talking about?!?! You can't ignore time value of money "assuming" that one will hold a stock for the next six months and that capital losses in that time will be erased!!!! The central idea with options is that there IS a time value to ownership and capital. Jeez, man, quit it with the inane ramblings, you're just embarrassing yourself.
Of course Satyam looks great in your "analysis". You used a high strike price and ignored all the other variables!! Here's another look at your "analysis"--
Stock price on June-25 $24.50
Call premium for $25 for Jan-08 = $2.60
If one buys 200 shares one would invest $4,900
Max return is ($2.60 * 200) + (($25 - $24.50) * 200) = $620 = 12.7%
Min return is $2.60*200 = $520 = 10.6%
THE ACTUAL MIN RETURN IS:
-4,900 + ($2.60 * 200) = -$4,380 IF THE STOCK GOES TO $0.00
Dan, you can't IGNORE the value of the underlying stock. You can't ignore time value of money--of course if you pick a $30 strike price you will make "more money" at the "max". If you had run the analysis with a strike price of $50, you would have calculated an even greater "max" return.
This is beyond sloppy, it's just ignorant. Please try to understand what you are saying befor you say it.