Thursday, October 20, 2011

Nokia Covered Call Experience

Bought shares of nokia for 5.79, sold October covered call at 6 in September for 60 cents each. Watched stock go to low 5 area, and the coverd call drop to nearly 17 cents. Could have bought back the covered calls and locked in that profit. Instead Nokia reports better than expected results and the stock goes up to 6.6 the day before the options expire. Instead of nearly doubling profits, I have the flat even result of buying shares at 5.79, selling the shares at 6, and the total profit from selling the covered calls at 60 cents each. Basically, buying at 5.79 and selling for 6.6 in 2 months. But if the covered calls were bought back at a lower price, that would have been 45 cents per share extra profit.

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