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

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Michael Hart who wrote (8946)	11/9/1998 8:20:00 PM
From: Herm	Read Replies (1) of 14162

Hi Mike, CS - PULLING BACK - LOCK IN CCs in the money! As of today, CS is pulling back after the upper BB tag and very high RSI. The price should pull back to the lower BB band as the RSI drops off. That's for that tip off! askresearch.com ---------------------------------------------------------------- QUESTION "Your W.I.N.S. approach would seem to scream that CC's be sold anywhere during the past week on CS ( penetration of upper BB's and RSI approaching 80 ) but I'm confused about how you interpret a potential "breakout" which would hold you back for a time period. Next earnings are due in December and could cause a breakout if CS exceeds by any amount. Do you wait for a pull back from the upper band combined with a continued high RSI ?" Please take a look at the chart and let me know what you think. Congratulations on a great thread."</b ANSWER Thanks for your question and interest in our forum. Using your CS to answer your question. When CS bottomed out $6+ back in Sept. 1998 the RSI was very low. Not the lowest it has been, but low enough. Below is a review of the P/E value for CS. Back in Sept. CS was selling for way below the other stocks in the group. So, some upside rebound was an event waiting to happen. All those months of CS going sideways and downward encourages investors to short the stock to make a profit. The CS growth rate is only 17.7% annually. With a P/E of multiple of 34.5 it's no bargain compared to other stocks. CS has now reached a price level where everyone for the past six months can dump the stock and MAYBE break even! I would bet CS will now tag that lower BB for sure! It would take a major news event to over come that resistance. NYSE: (CS : $12 7/16) $1,961 million Market Cap at November 9, 1998 Ranks 876th in the Fortune 1,000 on Revenue & 432nd on Profit. Employs 5,375. Trades at a 18% Discount PE Multiple of 34.5 X, vs. the 42.1 X average multiple at which the Networking SubIndustry is priced. I still believe the low RSI, increased short interest, and a discounted P/E will always result in an eventual upward gap! That is the best explanation I can think of.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next