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

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To: Jon Tara who wrote (11653)	10/10/1999 2:15:00 PM
From: Herm	Read Replies (2) of 14162

Hi Jon, Let's take a look at your three high flyers. These three stocks have done exceptionally well over time. By the way, what brokerage do you use for your spreads and LEAPs? What are the requirements in order to trade spreads? I'm sure many would be interested. CMGI NASDAQ: (CMGI : $112 1/2) $10,723 million Market Cap at October 8, 1999 Loss Expected for 1999; Internet Products & Services SubIndustry priced at 253.3X PE Internet Products & Services SubIndustry up 1.75% / Technology Industry up .30% Today CMGI SPLITS GALORE I would be amazed if CMGI splits again in Jan. 2000. The last three 2-1 splits have been 11 May 98, 11 Jan. 99, and 27 May 99. According to the CMGI weekly plot it sure looks like it will continue an upward bias with another split likely. RSI is relative low for this stock at about 50 RSI. OBV is increasing, and the upper and lower BBs are diverting outward with a upward moving average in between the BBs. All very positive signs considering that this stock is not turning a profit yet. CMGI incorporated 1986 in Delaware. Closely-held by Microsoft, Intel, Sumitomo, and Compaq. Intending to integrate AltaVista into its network of 50+ Internet sites, traded 16.4% of CMGI and $220 million for 83% of Compaq's (NYSE: CPQ) AltaVista search engine and Shopping.com and Zip2 units, issuing 20.8 million new shares. Agreed to acquire Flycast Communications Corp (Nasdaq:FCST), CMGI will issue 0.4738 CMGI shares for every share of Flycast. iqc.com CMGI LEAPs Expect CMGI to move to a higher price with the potential for another split in Jan. 2000. Buying the 70s JAN 01 LEAPs @ $57 and hold for higher prices. You could CC the 130s CALLs @ 12 or more and cover your nut of $70 strike+$57=$127.00 if called out at $130 with another 2 points. That a total of $14 points or 25% by Jan. 2000. Not too bad! Plus, if you get called out it would taxable in 2000 and you would not pay taxes until 2001. The previous 52-week high for CMGI was $152.00 and with a 50% growth rate, this stock is smoking at this point. The next earnings report is 23 Dec. 1999. I will return and comment on the other two. I'm playing catch up on the emails and the newsletter column for next week. I'm tweaking a WINs Technical Summary list donated by a lurker. Sign up for the free newsletter at coveredcalls.com

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