Jun 7, 2005

Well, I’ve learned something about the company that I’ve been executing my trades through. Aparently, if the underlying stock is $0.25 above the strike price at time of expiration, the system will automatically execute the trade. Additionally, if you buy the stock option and the stock starts going up, you can sell the option for more than you paid for it. But, you then loose the right to execute the contract.

I’ve also learned something else, if you want to execute the option before the expiration date, you can do so at anytime. Remember, a call option is the right to purchase a set amount of stocks on or before a specific date. But, you cannot place a “limit order” for a purchase price. For instance, here is an email that I sent and recieved from Scottrade.

—–Original Message—–
From: Scottrade Customer Support [mailto:support@scottrade.com]
Sent: Tuesday, June 07, 2005 6:28 PM
To: RJ Martino
Subject: RE: Acct: 53938090

Dear Mr. Martino,

Thank you for your email. Options cannot be exercised online. If you wish to exercise an option, you must contact your local branch office with your exercise request. There is no system to set your options to exercise when the underlying security reaches a particular price. The previous email reply was assuming that you wanted to sell your option contracts themselves, not exercise them.

Please let us know if you have any additional questions or comments.

Sincerely,
Kevin Kohler
National Service Center Broker

Scottrade, Inc.
Scottrade has been named Highest in Investor Satisfaction With Online Trading Services Five Times in a Row by J.D. Power and Associates. For award information, visit www.jdpower.com.

—–Original Message—–
From: RJ Martino [mailto:rjmartino@iprovonline.com]
Sent: Tuesday, June 07, 2005 5:14 PM
To: Scottrade Customer Support
Subject: RE: Acct: 53938090

I understand limit orders but I want to know how I can set a limit order to “execute” my options contract.

I want to execute one contract (.XECFH) if XEC reaches $42.00. How would I do that?

RJ Martino [rjmartino@iprovonline.com]
iProv, LLC [www.iProvOnline.com]
ETAS 551
2801 South University Avenue
Little Rock, AR 72204
ph. (501) 683-7229