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+84 Part II: Call Option Strategies 
+Example: An investor previously entered a covered writing situation in which he 
+wrote five January 30 calls against 500 XYZ common. The following prices exist cur­
+rently, l month before expiration: 
+XYZ common, 29¼; 
+January 30 call,¼; and 
+April 30 call, 2¼. 
+The writer can only make ¼ a point more of time premium on this covered write for 
+the time remaining until expiration. It is possible that his money could be put to bet­
+ter use by rolling forward to the April 30 call. Commissions for rolling forward must 
+be subtracted from the April 30's premium to present a true comparison. 
+By remaining in the January 30, the writer could make, at most, $250 for the 30 
+days remaining until January expiration. This is a return of $8.33 per day. The com­
+missions for rolling forward would be approximately $100, including both the buy­
+back and the new sale. Since the current time premium in the April 30 call is $250 
+per option, this would mean that the writer would stand to make 5 times $250 less 
+the $100 in commissions during the 120-day period until April expiration; $1,150 
+divided by 120 days is $9.58 per day. Thus, the per-day return is higher from the April 
+30 than from the January 30, after commissions are included. The writer should roll 
+forward to the April 30 at this time. 
+Rolling forward, since it involves a positive cash flow ( that is, it is a credit trans­
+action) simultaneously increases the writer's maximum profit potential and lowers the 
+break-even point. In the example above, the credit for rolling forward is 2 points, so 
+the break-even point will be lowered by 2 points and the maximum profit potential 
+is also increased by the 2-point credit. 
+A simple calculator can provide one with the return-per-day calculation neces­
+sary to make the decision concerning rolling forward. The preceding analysis is only 
+directly applicable to rolling forward at the same striking price. Rolling-up or rolling­
+down decisions at expiration, since they involve different striking prices, cannot be 
+based solely on the differential returns in time premium values offered by the options 
+in question. 
+In the earlier discussion concerning rolling up, it was mentioned that at or near 
+expiration, one may have no choice but to write the next higher striking price if he 
+wants to retain his stock. This does not necessarily involve a debit transaction, how­
+ever. If the stock is volatile enough, one might even be able to roll up for even money 
+or a slight credit at expiration. Should this occur, it would be a desirable situation and 
+should always be taken advantage of.