Message Font: Serif | Sans-Serif
No. of Recommendations: 3
So here's what I see. You are getting virtual shares of Microsoft for $29.53 and so long as its below $31 in January, you pocket a $.97 premium.

I wouldn't touch this with a 10' pole because essentially you are assuming all the risk associated with the stock but you don't get the dividend which has been the biggest reward for shareholders over the past 10 years. You profit on this position so long as the stock finishes above $28.56, but your upside is capped.

My feeling here is that Microsoft is at a pivotal point. If Windows 8 fails to gain traction, it's going to be a long road to recovery and I think everyone knows it and it's likely shareholders (and synthetic shareholders) will be punished. If Microsoft does well, shareholders will be rewarded, but you're left with a modest gain.

If you think Windows 8 is going to be a hit, I sugget you just do a straight synthetic long and skip the covered call. You seem to be betting on status quo which I feel is unlikely at this point.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.