OK, so I promised some real trades, and so here we go:
EK (Eastman Kodak)
Entry Date 7/21/2009
400 Shares of EK at $3.09 (Commission $4.95)
4 contracts EK HR (Kodak Aug. 2009 Call $3 strike) at $0.38 (Commission $7.55 +$0.01 SEC Fee)
The totals are therefore:
$1096.51 to open position (or $2.72 per share)
Goal is for EK to close Aug 22nd at or above $3.01 per share.
($3.00 even is an interesting scenario that I will perhaps get into on a later post.)
Assuming that happens (and as I write this EK closed at 3.83) I would sell for:
1195.02 (assuming a $4.95 commission and a $0.03 SEC charge)
For a total gain of $98.51 on $1096.51 invested, or a one month gain of 8.9%
Once again, I am giving up upside potential for a high probability of gain.