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

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

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To: jaytee who wrote (11895)	11/24/1999 11:33:00 AM
From: virgil vancleave	Read Replies (2) of 14162

As far as valuation, I like to use what I call an enterprise value. This is based on sales, debt, cash, and market cap. Here is a basic equation: stock price times number of shares plus cash minus debt, then divide that total by the trailing 12 months sales. Obviously, if a company has no sales, it's valuation is outrageous on this model. They say for a technology company that 1.5 to 2 is normal to slightly undervalued and if below 1, it is undervalued. As far as charting, I pretty much use the same sources that herm does. Data may not be real time, but it seems to work anyway. As you may notice, there are some gross valuations in the market today, where the stock price just keeps going up and people just keep buying. There will come a time when they will give most or all of their gains back. Hope this helps. good luck and Happy Thanksgiving.

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