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

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To: Jeffry K. Smith who wrote (12141)	1/4/2000 5:13:00 PM
From: Herm	Read Replies (1) of 14162

What do you mean by "tagged"? By float turnover I presume you mean the mount of time it takes all shares in the float to be traded? How is this amount of time represented? As you will read in the WINs PowerPoint presentation, by tags we mean when the price tags the upper or lower BBs. We use two indicators to help confirm and support the other. So, the BBs and RSI is ALWAYs used together. I like to plot weekly profiles to see the major trend direction. Later, I might switch to daily prices in order to have a better feel for my entry or exit points and executions of option(s) sideshows. It will all make sense when you read it. If you take the average monthly shares traded and divide that number into the number out outstanding shares in the float, you will get a ratio of the turnover rate. That is, how long in days it takes for a stock to turnover (TRO) 100% of the company's stock. Every company has a different TRO. Example, the viper tech stocks might have a 10-day TRO while Sears may have a 230-day TRO. You would get a much larger gap in price in the viper simply because so much of it's TRO changes hands. Thus, you would be wise to time your CCs accordingly to your expected outcomes or trading style. In other words, strike price and time out in months. I'm not clear on what you mean here about running the clock either, though I presume you mean holding to expiry... You got it! Once you have a feel for the stock you own and the TRO, you can read the chart for major clues in the overhead price resistance level or the bottom price support level. Thus, you know when to hold'em or know when to fold'em and cover if necessary. Generally, if there is very little time value remaining on my CCs, I will cover cheap with my profit in hand and move on into another round of CCs if I can. It makes not sense to hold CCs if the bulk of the value is in your pocket. Example, they paid you $2 and there is only a 1/4 point remaining in the CCs and say three weeks of time before expiration.

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