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

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To: Herman J. Matos who wrote (728)	3/17/1997 8:13:00 PM
From: Herman J. Matos	of 14162

HOW TO WRITE COVERED CALLS - A REAL CASE STUDY! ================================================================== Date:Monday, March 17, 1997 THE STOCK: ROSS STORES (ROST) Closed unchanged at $28 for the day on a total volume of 846,500 shares traded. The last tick for the day was UP on a 1,000 shares size sale at 3:59 pm. Tomorrow is the expected earnings report. ROSS STORES once again did fantastic today. There was some early morning profit taking and then a strong comeback. I unloaded by four(4) March 27 1/2 calls today for 1 1/4 today which I picked up late last week for 15/16. So, I made a little bit of money on the calls. I updated my template and it now reads $8,503.95 net cost basis for 400 shares or $21.26/share. Total profit $2,696.05 or 31.70% straight (63.40% with margin) or $6.74 per share. I still have my 4 April PUTS and are selling for 1/2 unchanged. I'm tied up tomorrow so I wanted to exit my call positions in the positive range. PROFIT "JUICE" PROTECTION: Again, those April PUTS are CHEAP! Determine your deductible (like a car insurance policy)and buy puts (using your call buyer's money of course) at the money or one strike price below that! As expected the the April 25 PUTS dropped down 1/2. SWEET MOTHER'S MILK: Tomorrow should be interesting. My guess is that ROSS STORES (ROST) should hit $30 to $32. I started looking at the sector indicators today and the Retail (Apparel) weekly chart was blasting off. The index was up a solid +2.627. Another sector that is really moving up is the Retail (specialty) stocks. Up +1.697. THE PARTY POOPER: The 10-Yr. T-Bills is still TOUCHING THE 300-DAY MOVING AVERAGE! STILL NOT GOOD! Again, the Fed. meeting Thursday should be the pivot point. The Nasdaq Technology Stocks were hit again today! I'm raising cash to start my PUT buying for my technology holdings. THE BOOGIE WOGGIE: The volatility index (VIX) was wild today. Up and down and rock n roll. The VIX closed up +1.20 at 23.03. And the word on the street is that the four new DOW stocks are going to make the volatility even more pronounced! TO BE, OR NOT TO BE!: Employee Solutions (ESOL) after a nosedive last week made a trader's bounce from all the PUTS being cashed in. I have been considering the May 10 or 12 1/2 calls for a pure speculation play. This stock had been trading at $27+ a month ago and today it's only $8 1/16. Sounds really cheap. Stock fell on rumors yet to be proven! Check it out and see what you think. Earnings report today came in higher than projected. That's it! Wishing you all, "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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