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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Herm who wrote (1483)	3/26/1997 9:07:00 PM
From: Herm	of 14162

HOW TO WRITE COVERED CALLS - A REAL CASE STUDY! ================================================================== Date: Wednesday, March 26, 1997 The stock: ROSS STORES (ROST) Last traded at $26 1/4 up down -1/4. I still think that ROST is trading in a normal range with light volume or 463,000 shares. The upturn in the Nasdaq today should help Rost to break through the high of $28. As mentioned before, the majority of stocks never charge the recent high the first time around without something behind it! What we have going for ROST is the stock buyback program that is in place. Hence, there is some downward protection in owning ROST since it's safe to assume that they will buy back their own stock anytime it get too cheap. For example, the $23.00 price range. We witness a +2 point comeback the other day. That's what a little juice can do on low volume down days. Then they slowly sell the stock back on the open market on high volume up days. You and I never notice the market makers at work. ROST Option Prices: One of our fellow readers turned me on to this web site! Thanks! Here are the monthly option prices for ROST stocksmart.com By the way, I purchased 4 contracts for the April 22 1/2 Calls and I'm still holding on to my 4 April 25 PUTS. So, any extreame movement up or down and I'm cranking in some more bucks. I still have not been called out of my 4 April 25 covered calls. Days like today don't impact me. Every day that passes EATS UP THE CALL BUYER'S PREMIUM! Let The Trend Be Your Friend! The Nasdaq seem to come alive today! Even my USRX was back to those +3 3/8 up days. Great action! Does wonders for the margin increase. What Covered CALL Cards am I Holding? Again, I'm still holding the covered calls for 4 April 25s Calls. If I don't get called out this week then I'm home free and I will be looking once again to cover my calls when it's to my advantage. Because, I'm bullish on ROST I'm also a buyer of calls once again to enhance my position. If I do get called out, I can bounce back by immediately taking possession of the 4 April 22 1/2 Calls and riding it up as far as possible before I write another deep in the money call. That will give me downside protection, new working capital to buy puts or what ever. Think of ROST stock as a "pin pong ball." Just slap those PUTS and CALLS against the herd to loosen up those dollar bills. VIX Volatility The VIX is down for the week by -1.61 at 20.27. It was a very calm day. The small techs stocks are bouncing back. The tech sector was on the 200 day moving average. It should continue to bounce back now that the interest rate hike has passed. By the way, I'm posting the earnings report for Tech Data. The earnings is unreal for this company. What kills me is the fact the stock went down today on heavy volume. TECD surprised the street FOR THE LAST THREE QUARTERS in a roll. That's It! Wishing all of you, the BEST OF GOOD BUYS! ********************************************************************************* DISCLAIMER: The writer is presenting a real stock and a live ongoing case study. No recommendations or endorsement to actually buy this stock are suggested nor implied. Trading stocks and buying calls should not be attempted without first understanding the risk/rewards of this type of investment! The writer assumes no responsibility for the opinions being expressed! Buyers always be aware! *********************************************************************************

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