7/17/2008 2:43:04 PM

I suspect the Aug 20 call is in jeopardy. Here's how I am dealing with a couple of similar situations: a GTC order to purchase at the too-low strike. This has some attractive features: 1) you are buying when the stock is obviously rising. 2) there is a reasonable expectation the stock will be called away shortly, incurring minimum carrying cost. 3) if it isn't called away you have averaged down in encouraging circumstances. 4) from experience, it often works.

phg

7/17/2008 8:33:14 PM

Not sure I'm following 100%. What is the "too-low strike" you're referring to?

Bill B

7/18/2008 2:10:19 AM

You purchased at 25. Now a call has been sold at 20, so low that if called there is a loss. The proposal is to buy another 100 shares at or below 20 and let those be called away instead if it comes to that. The GTC order says you don't make the purchase until the stock in fact trades at that price, heightening the likelihood of being called away. A second call can be written at 25 anytime. Carrying cost should probably be estimated pro-rated at $100 per year.

phg

7/18/2008 7:21:44 AM

I purchased at 22.5, but that doesn't matter. I understand what you're saying. And it also makes sense that my 20 calls are in jeopardy now that I've seen the news of the morning

Bill B