How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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

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To: Mr.24K who wrote (7782)	6/28/1998 6:23:00 PM
From: Herm	of 14162

Hell Ray, Background Info: My 7 BTGC July 10s CCs were originally written (sold) at a higher ($ premie) price when the stock was closer to $9.00 a few weeks ago. The stock is now around $7.50 up from a bottom of $7.00. Now, the BTGC earnings report is due out Monday, July 13, 1998 which is two weeks away. No early negative warnings have been issued by BTGC. So, we have positive expectations and a stock which is selling at a 40% discount compared to other bio-tech stocks. The technical indicators (RSI and BB) have clearly indicated a reversal in price. Rational for Covering? 1. It is my belief that BTGC price will continue to increase as we approach the earnings release. Hence, the premies will also increase significantly when I'm ready to sell CCs again. I will monitor the RSI and BBs. 2. It does not make sense to me to hold onto CCs that are only worth 1/16s for three weeks time! Especially, when I am expecting the stock may increase above the strike price of $10.00. I can resell CCs for much more premie money than what it cost me to cover my CCs. Would you agree 1/2 + 7/8s is more than 1/2? 3. The earnings release date is before the July 17, 1998. I will write another round of CCs before or after the earnings release date for a strike price and month that will hopefully provide me with more $$$$ premies than I previously had already. With the extra premie $ money I can optionally protect myself with cheap PUTs just in case BTGC does not beat the whisper numbers. IS THIS THE WAY TO WRITE CCs? I will say this! You can be a passive, moderate, or an aggressive CCer. Rarely, does anyone talk about the tool shed strategies which you can use to CC. If you can apply the chart reading with CCing you can really enhance your profits.

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