A.I.M. Users Bulletin Board

[Toofuzzy]

Hi SF

First off I went out to JAnuary of 2018

Buying the $10 call was like buying the stock on margin without paying margin interest and going that low in price gets rid of a lot of the time premium, but not all.

So selling the $25 call more than covers the time premium.

It cost me $8.28 to buy the $10 call and i took in $1.72 on the $10 call for a net cost of $6.56.

If it gets called I have a cost of $6.56 + $10 = $16.56

$25 - $16.56 = $8.44 gain

But that gain is not on $16.56 but on the $6.56 I laid out.

So i will have more than a 100% gain in 14 months if called away. If not I have a cost basis of $16.56. So do I really care if it gets called away? That is above my AIM directed sell price anyway.

I did sell some $20 puts a day or two too early before doing the above trade. I did it when $20.50 and took in $3.59 I could have done a lot better. But I am willing to buy at $16.41 Again that was for January 2018. I like getting LOTS of time premium.

Only use options for what you are willing to do anyway. Say that to yourself 3 times before making any option trade.

Not always
Toofuzzy