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  • Which IT Outsourcing Company Gives Maximum Return on Covered Calls? [View article]
    Sorry, not sure why the original post was truncated. Here's another try:

    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.
    Jun 26 13:41 pm |Rating: 0 -1
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