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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Dave Wulkan who wrote (11390)8/19/1999 8:14:00 AM
From: Herm  Read Replies (1) of 14162
 
Welcome to the forum Dave! IFMX is in my long portfolio as a
good CC workhorse. There is much more upside potential.

NASDAQ: (IFMX : $7) > $1,062 million Market Cap at
August 18, 1999 Trades at a 55% Discount PE Multiple of
18.9 X, vs. the 42.4 X average multiple at which the
Software & Services SubIndustry is priced.

I can't comment on the brokerages you mentioned simply
because I have not looked at those. But, please do inquire
if they will allow you to trade calendar spreads using
LEAPs. That is, writing CCs against the LEAPs as a surrogate
for the stock itself. HIGHLY profitable with lower risk in
my opinion vs. the rewards.

Example, you can buy the IFMX 5 JAN02 @ 4 LEAPs at this
point compared to $7.00 for the stock. That's $400 vs. $700
out of pocket expense. If IFMX moves up to $8.00 you could
write a spread for the FEB.10s @ approx. 1 1/2+ which is
about a 38% return is not called out! Plus, another $1.00
if called out. You net cost would be $5 LEAPs stike price +
$4 cost = $9.00 spread B.E.

Otherwise, Dave! You can lower your commissions by writing
at least 3-4 contracts min. to overcome the downstroke when
writing CCs. Contract min. vary from company to company.
You might want to check out Waterhouse which allows LEAP
spreads, super low stock commissions online, and plenty of
research and a fair margin requirements. There option cost
are lower than my DLJ Direct which I'm convinced I will
switch some of my money out DLJ is geared for $100,000+
account portfolios. They are into IPOs which I don't touch.
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