Disney Homework

Theresa H on

Disney (DIS)

A. What premium sold for: .46 (Strike price at $50)
B. What Expiration date: August 18
C. On what day did I SELL: Thursday, August 9
D. What DIS Price: $49.97 (price of stock at time of SELL)
E. APR: 35%

Notes:
When looking at today's numbers, I didn't feel that DIS was a good
candidate for a covered call since there were no great "out of the
money" premiums. The stock hovered around $50 all day (in or near the
money) and the next strike price was $55, with basically no premiums.
After looking at StockCharts.com & doing some research on DIS
"Headlines," I decided that the stock may not be a great covered call
possibility for the week. If I were using "real money," I would not
place a covered call on DIS. However, for the homework, I decided to
wait for the stock to go under $50 today (out of/near the money) which
it did at the very end of the day. I placed the option then because I
figured the premiums would drop each day as it neared August 18. The
APR was higher for the front month - 35% (lower premium) and was 20%
for the second month (but with higher premium).

Theresa Hullinger

Paul Madison on

Great Job Theresa!

You get a gold star for being first and doing an outstanding job. You were not only thoughtful about the whole process but I really your honesty around the fact that if it were your money you might not have done a DIS covered CALL today!

Excellent work and you have put a great Bogey out there for people to try to beat.

Hope to see some others who have ventured into the virtual waters.

Paul Madison

TheCOOLClubDude@gmail.com

www.bivio.com/COOL_Club

On Thu, Aug 9, 2012 at 5:27 PM, Theresa H <breezytreeshome@gmail.com> wrote:

Disney (DIS)

A. What premium sold for: .46 (Strike price at $50)
B. What Expiration date: August 18
C. On what day did I SELL: Thursday, August 9
D. What DIS Price: $49.97 (price of stock at time of SELL)
E. APR: 35%

Notes:
When looking at today's numbers, I didn't feel that DIS was a good candidate for a covered call since there were no great "out of the money" premiums. The stock hovered around $50 all day (in or near the money) and the next strike price was $55, with basically no premiums. After looking at StockCharts.com & doing some research on DIS "Headlines," I decided that the stock may not be a great covered call possibility for the week. If I were using "real money," I would not place a covered call on DIS. However, for the homework, I decided to wait for the stock to go under $50 today (out of/near the money) which it did at the very end of the day. I placed the option then because I figured the premiums would drop each day as it neared August 18. The APR was higher for the front month - 35% (lower premium) and was 20% for the second month (but with higher premium).

Theresa Hullinger

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