Louetta's Lore

[Louetta]

Here's the results of the IIC 100/Covered Call study. Don't know how readable this will be but let's try. I got 4 pages of results using all the stocks which have options and limiting the options to Novembers which give at least 3% downside protection and at least 3% profit if the stock is unchanged at expiration. This is the first page. in order of % gain if the option is assigned.

So to read the first (top) entry its Nutrisystem, symbol NTRI, currently at 65.23 up .32 Friday and the option is symbol NSIKO, a 2006 Nov 75 call with 36 days to expiration currently bid at 2.00 for a net cost of 65.23-2.00=63.23 providing 3.1% downside protection, 3.2% profit if the stock is unchanged on expiration, 18.6% profit if the option is assigned (i.e. gets to $75) and the probability of assignment is 19.8% though where they get that I don't know.

Let's see how readable this is when I post it.


Company Sym Price & Chg Option Sym Expire/Strike Bid Net Debit %Dnsd.Prot. % IfUnch. % IfAsgnd. %ProbAssnd

NutriSystem Inc. NTRI 65.23 (+0.32) NSIKO 06 NOV 75.0 (36) 2.00 63.23 3.1 3.2 18.6 19.8

NutriSystem Inc. NTRI 65.23 (+0.32) NSIKN 06 NOV 70.0 (36) 3.50 61.73 5.4 5.7 13.4 33.4

Smith Micro Software Inc. SMSI 16.51 (-0.43) QPMKW 06 NOV 17.5 (36) 1.00 15.51 6.1 6.4 12.8 39.1

Akamai Tech. Inc. AKAM 50.70 (+0.53) UMUKK 06 NOV 55.0 (36) 1.95 48.75 3.8 4.0 12.8 30.2

Intercontinental Exchange Inc. ICE 82.97 (-0.93) ICEKR 06 NOV 90.0 (36) 2.80 80.17 3.4 3.5 12.3 30.3

Titanium Metals Corp. TIE 28.17 (+0.4 TIEKF 06 NOV 30.0 (36) 1.40 26.77 5.0 5.2 12.1 36.8

Zumiez Inc. ZUMZ 32.70 (+1.27) QUYKG 06 NOV 35.0 (36) 1.45 31.25 4.4 4.6 12.0 33.0

Iconix Brand Group Inc. ICON 18.53 (+0.20) QIAKD 06 NOV 20.0 (36) 0.60 17.93 3.2 3.3 11.5 30.0

Atheros Comms. Inc. ATHR 21.18 (+0.7 QRAKX 06 NOV 22.5 (36) 0.90 20.28 4.2 4.4 10.9 35.6

MEMC Electronic Materials Inc. WFR 37.86 (+0.1 WFRKH 06 NOV 40.0 (36) 1.75 36.11 4.6 4.8 10.8 36.1

Terex Corp. TEX 51.38 (-0.80) TEXKK 06 NOV 55.0 (36) 1.60 49.78 3.1 3.2 10.5 30.0

Under Armour Inc. UARM 47.94 (+1.47) UWGKJ 06 NOV 50.0 (36) 2.55 45.39 5.3 5.6 10.2 39.6

Perficient Inc. PRFT 16.73 (-1.16) UTJKW 06 NOV 17.5 (36) 0.80 15.93 4.8 5.0 9.9 39.7

Lifecell Corp. LIFC 31.06 (-0.11) QKLKZ 06 NOV 32.5 (36) 1.45 29.61 4.7 4.9 9.8 37.4

Bucyrus Intl. Inc. BUCY 48.13 (+0.04) HBUKJ 06 NOV 50.0 (36) 2.40 45.73 5.0 5.2 9.3 40.3

NutriSystem Inc. NTRI 65.23 (+0.32) NSIKM 06 NOV 65.0 (36) 5.70 59.53 8.7 9.2 9.2 50.8

Crocs Inc. CROX 38.88 (+0.20) CQJKH 06 NOV 40.0 (36) 2.20 36.68 5.7 6.0 9.1 43.6

TheStreet.com Inc. TSCM 12.01 (+0.0 UGQKV 06 NOV 12.5 (36) 0.50 11.51 4.2 4.3 8.6 41.5

Intercontinental Exchange Inc. ICE 82.97 (-0.93) ICEKQ 06 NOV 85.0 (36) 4.60 78.37 5.5 5.9 8.5 43.9

Trident Microsystems Inc. TRID 25.02 (+0.03) HVUKE 06 NOV 25.0 (36) 1.95 23.07 7.8 8.4 8.4 50.1

[Rob]

Lou,

Quick tip: if you want your to display properly, you have to check the box that says "Disable smilies in text."

[Louetta]

Well my covered call position in ASPV is takeing a hammering today based on an earnings warning by the company. Its very irritating. I had an October $25 call and the stock is now down to $22 or thereabouts so I am attempting to buy back my Oct. 25 call and sell an October $22.50 call for a net debit of 35 cents. Not much but at least its better than nothing. The company is still standing behind their full year guidance so methinks there may still be a smidge of upside here so when the Oct call expires I'll probably hang onto the stock and see if I can find a November call to sell for a decent premium and see if I can get back in the money. Originally I paid $25.65 for the stock and sold the first call for $2.00 so I need the stock to finish above $23.65 to avoid losing money. If I can pick up 35 cents more here my break even goes down to $23.30. Currently its at $22.00. We'll see.

Got 30 cents for switching twixt the October $25 call to the Oct 22.5 call. Put in an order to try to roll the Oct 22.5 out to a Nov 22.5 call for a credit of $1.05. Figured its worth a shot. Poormans says he's holding his ASPV because the products they have (possibly in the pipe) justify a valuation of $80. We'll see.

[IIC]

Louetta...are you going to save the list till Nov. expiration and report the results?..Doug(IIC)

[Louetta]

Louetta...are you going to save the list till Nov. expiration and report the results?..Doug(IIC)

Yeh I can do that. It'll be a smidge misleading because you really should manage the positions like I'm trying to do with ASPV. So probably the results will undershoot although its possible to manage yourself out of some money though usually it helps.

[jiesen]

Got 30 cents for switching twixt the October $25 call to the Oct 22.5 call.

twixt... classic!

[mrmarket]

twixt... classic!

yeah..she's a smartie ain't she?

[IIC]

Yeh I can do that. It'll be a smidge misleading because you really should manage the positions like I'm trying to do with ASPV. So probably the results will undershoot although its possible to manage yourself out of some money though usually it helps.

Yes...Good point...You could report daily...But I wouldn't ask you to do that...However, being the options layperson that I am...Never wrote and have not played any for at least 14 years...Can you explain Assignment???...How does that work???...What happens???...thx...Doug(IIC)

[Rob]

Can you explain Assignment???...How does that work???...What happens???

Doug, I didn't know either, but I found this, if it helps. I know you'd rather talk to Louetta than to me, but I'm only trying to help.

[IIC]

Doug, I didn't know either, but I found this, if it helps. I know you'd rather talk to Louetta than to me, but I'm only trying to help.

Interesting...So can a call buyer actually exercise the right early???...Or am I off base???

Why would you think that I'd rather talk to her than you?..."Whither" did you get that idea???

[Rob]

So can a call buyer actually exercise the right early???

An option may be exercised whenever the holder wants, up to expiration.

Why would you think that I'd rather talk to her than you?..."Whither" did you get that idea???

Call it "man's intuition."

[Louetta]

Interesting...So can a call buyer actually exercise the right early???...Or am I off base???

Why would you think that I'd rather talk to her than you?..."Whither" did you get that idea???

Yeh it can. Only happened to me once or twice. That explanation ("this") is fine except it talks about the receipt of a notice causing the receiver to sell, etc., which kind of implies some passage of time and the receiver having to do something, in fact it happens automatically. You might get a call from your broker (Schwab does anyway) informing you that its happened but the horse leaves the barn before you ever know.

[Louetta]

Lets throw one caveat in there. What we've said applies to stock options and some index options. This is called American exercise, where the option can be exercised at any time. Some index options, most notably the S%P 500, are European style and can only be exercised upon expiration. Far as I know this is so people who hedge their position with options cannot have their protection taken out from under them unexpectedly.

[Tatnic]

Interesting...So can a call buyer actually exercise the right early???...Or am I off base???

Why would you think that I'd rather talk to her than you?..."Whither" did you get that idea???

Doug, no one would excercise an out of the money option, I'm sure you knew that. But if you sell a deep in the money option it can go pretty quickly and you're left holding the bag, ie you've got to buy the shares and give them to whoever is excersing (you still keep the option prem if there was any to begin with...itm options often times have little time value).

If the mm is a prick they can excercise an option that is only a few cents in the money, well before expiration..I've had it happen before. Most of the time you're better off selling pure time since options decay at an exponential rate.

[skiracer]

twixt... classic!

Wasn't there a second word that was usually coupled with twixt. I thought it was "tween". Where the sentence might go, "it was nor twixt or tween". I don't know why I am flashin on this phrase. Anyone else ever heard this phrase?