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

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To: hpeace who wrote (1386)	3/19/1997 9:27:00 PM
From: Robert Graham	of 14162

I am going to put this tool, the put option, in my toolbox even for stock that I do not write ccs on. This would be particularily useful for "turnaround" stock purchases. It can be cheap insurance. Boy, I wish I would of done this with Informix. It looks like many stocks were pulled sown by the market drop. The good news is that the Dow closed still above its 50 day MA, and many stocks were in the process of recovering from their drop. This is good. Also, NASDAQ is now at its 200 day MA. This actually can be seen as a good sign. Both are in the position to bounce up from here. Hopefully both of these indices will move up in the next couple of days which will help to determine the extent of the rebound of ROST. I see ROST closed just under 26. It looks like this stock's top is just about over and ready for a downtrend. If the stock tomarrow closes much further below 26, like lets say 25.75 or below which will keep it below the 26 resistance level, then I think the stock the stock will continue on its downtrend. Otherwise there looks like a possability of a final rebound for the stock that may go up to at most to 28 but more likely up to a little over 27. This day's close shows a close near the open near the top of the day's price bar. Also, the open was the highest price traded today for this stock. This means that there was a rally taking place toward the end of the day which is a positive sign. Also, the volume did not validate this price drop. Furthermore, on my chart, this price bar is entirely outside the lower Bollinger band which is rare and an indication of an extreme price drop for the stock. So I think the price of the stock will correct by rebounding from here before it starts its downtrend. It will be interesting to see what actually happens next. This market is getting real interesting. If the Dow breaks down past its 50 day MA, or NASDAQ breaks down past its 200 day MA, then all bets are off. I think the large drop in price of ROST yesterday portented today's price action.

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