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Strategies & Market Trends : Three Amigos Stock Thread

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To: Sergio H who wrote (7665)	8/13/1998 10:55:00 PM
From: Amigo Mike	of 29382

Options ?????? Did someone mention OPTIONS ?????? Covered Calls ..eh ??? Hmmmmm. Been studying that very play since I feel the market will now be stale for a little while. As you are aware, I have started purchasing the Jan 7.50 APCO calls (QFMAU). With this strategy .....(I have an avg cost of 1 13/16) APCO needs to be above 9 5/16 by mid January to make money on the option. I think everyone on the board here would agree they would expect APCO to be much higher than that by January. I am leveraging my cash in this APCO option to take advantage of a move to 12.50 (could be conservative) sometime between now and January. I will have the 3rd qtr earnings, and news on expansion of Easycare and be able to take advantage of Banc One and Allstate revenues kicking in. I see that the so-called "analysts" all have strong buys on the stock. I think the estimates are .47 for the FY98 and .60 for FY99. IMO ..... APCO might hit .52-.54 for FY98 and .69 for FY99. IMO ... this spells ANALYST UPGRADES. Institutions now own ~25% and I'd expect more accumulation there. The TA tells me the 7.50 should be the floor for this stock. This all spells solid upward potential. Having said all that ...... the calls in APCO actually have very little premium. The Sept 10 and Oct 10 would only yield 5/16 and 1/2 respectively in premium. Not really worth going after minus the commissions and limiting your upside potential. Since I feel the downside is 7.50 ...... selling the PUTS might be the better play .... however that does require substantial assets in your account and/or an accompanying call to open a straddle. Anyway ..... I would not suggest the APCO calls as a covered call candidate until APCO has actually made a strong move upward (premiums expand) and then stalls. That would be the optimum time to consider this play. I'm still seeking opportunities to get more Jan 7.50s cheap. I missed the last dip the other day. =( Amigo Mike

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