NFLD Covered call $15 DEC HELP!!!!

[jdoe]

What am i missing?

Lets say I buy 1400 shares of NFLD and write 14 calls for december.

If it gets called I make about 5300 minus comissions

If it dosent get called i keep the $2400 premium

If the stock falls below 11.20 per share and i sell it I lose money.

This can't be right can someone smarter than me tell me why this will not work?

thanks
jdoe

[pig4bill]

What's hard to understand? It goes up you make money. It stays flat you make less money. It goes down you lose money. It goes down a lot you lose a lot of money.

It goes down right away, you get scared, cover the options for almost as much as you sold them for because there's so much time premium left, and sell the stock for a loss. Then it goes right back up and you get pissed. Or you think you can hang on because you have the "cushion" of the option money. So you hang on for 7 weeks and watch the stock slide into oblivion and lose a lot of money.

[mal_noles]

Another way to look at it is you are just synthetically selling puts.