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+Cl,apter 2: Covered Call Writing 55 
+one writes against, the higher his returns and the lower his break-even point will be. 
+This is true for both cash and margin and is a direct result of the way commissions are 
+figured: Larger trades involve smaller percentage commission charges. While the per­
+centage returns increase as the number of shares increases for both cash and margin 
+covered writing, the increase is much more dramatic in the case of margin. Note that 
+in Table 2-14, which depicts cash transactions, the return from writing against 100 
+shares is 9.9% and increases to 12. 7% if 2,000 shares are written against. This is an 
+increase, but not a particularly dramatic one. However, in Table 2-15, the return if 
+exercised more than doubles (21.6 vs. 10.4) and the return if unchanged nearly triples 
+(13.0 vs. 4.4) when the 100-share write is compared to the 2,000-share write. This 
+effect is more dramatic for margin writes due to two factors - the lower investment 
+required and the more burdensome effect of margin interest charges on the profits of 
+smaller positions. This effect is so dramatic that a 100-share write in a cash account in 
+our example actually offers a higher return if unchanged than does the margin write 
+- 7.1 % vs. 4.4%. This implies that one should carefully compute his potential returns 
+if he is writing against a small number of shares on margin. 
+TABLE 2-14. 
+Cash covered writes (costs included). 
+Shares Written Against 
+100 200 300 400 500 1,000 2,000 
+Return if exercised (%) 9.9 10.0 10.4 10.8 11.2 12.1 12.7 
+Re~rn if unchanged(%) 7.1 7.2 7.5 7.7 7.9 8.4 8.7 
+Break-even point 40.1 40.0 39.9 39.9 39.8 39.6 39.5 
+TABLE 2-15. 
+Margin covered writes (costs included). 
+Shares Written Against 
+100 200 300 400 500 1,000 2,000 
+Return if exercised (%) 10.4 15.8 16.6 17.4 18.4 20.4 21.6 
+Return if unchanged (%) 4.4 9.8 10.3 10.8 11.4 12.3 13.0 
+Break-even point 41.2 41.1 41.0 41.0 40.9 40.7 40.6 
+WHAT A DIFFERENCE A DIME MAKES 
+Another aspect of covered writing that can be important as far as potential returns 
+are concerned is, of course, the prices of the stock and option involved in the write.