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: Dr. No who wrote (8108)	8/6/1998 5:54:00 PM
From: Herm	of 14162

Short interest percentages? Keep it simple! If I tie a 10 pound weight to one of your legs I know you will walk slower than normal. If I tie another 10 pounds on the other leg you will walk even slower than before. Well, more short interest means more liquidity and a drag on price increases. Sure, the stock moves downward. More supply than demand means lower prices. Conclusion? Take off those darn weights and you will walk alot faster and that stock will move much higher. :-) Before I buy PUTs I look to see if I have any money! Seriously, if I already own the stock and I'm long I will be following the stock pretty close using the BB and RSI as the calendar for all events. Using the W.I.N. concept as the price increases (I) and peaks (as indicated by a tag of the upper BB and the RSI confirms a high in that cycle) I will write the CCs at or deep in the money (look at the width of the upper and lower BB. Bigger distance means more volatility and wider price swing) and turn around and buy the cheap PUTs as a sideshow! Otherwise, if I don't own the stock and I just want to take advantage of a situation like bad earnings, high BB tag with a 52-week high and high RSI I know it is good for a no-brainer because of the profit taking. Example, internet stock recently and many other stocks that fit the situation. Right now, it a turkey shoot. Although, I might have read TLAB wrong! We will see tomorrow if yesterday's big drop and then reversal to close lower than the day before was the almost bottom BB tag for TLAB. This one was hard to tell.

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