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

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To: Herm who wrote (2005)	5/5/1997 8:17:00 PM
From: Herm	of 14162

HOW TO WRITE COVERED CALLS - A REAL CASE STUDY! ================================================================== Date: Monday, May 05, 1997 The stock: ROSS STORES (ROST) did a tunr around and headed north just I expressed on Friday. ROST last traded at $27 7/8 up 1 1/2 on a volume of 413,000 shares. Remember, large volume downward extreames like this past Friday is usually the pivot point. Right on! ROST OPTION PRICES: Now! About four weeks ago I had suggested TECD which was trading around the $22 to $24 range. Today it was almost $28+. I picked up two TECD May 25 Calls @ 2 1/2 each. I sold 4 covered calls for the May 30s and I hope they call me out soon! The high for this stock was $36 a few months ago. My guess is that TECD is going to reach at least $34 within the month of June when the next earnings report is due out. So, you still have some upside potential. Right now you can throw darts and catch the BULL's upward charge. I am going to exercise my right to buy TECD which will bring my holdings to 600 TECD shares. Also, USRX has been gapping up in price over the past week. Almost 11 points and the surge is starting to wear off. My covered calls are $5.00 In The Money and I still have not been called out for the June 55s calls. I expect some profit taking to start. So, I picked up 10 contract of the May 55 PUTS for a mere 7/16 and I expect to earn about 5/8 of a point profit each. So, the math would be $62.50 x 10 = $625 less commissions in one weeks time I expect. Where can you invest $487.50 up front and get a return of over $200 to $500.00 in a week? I am starting to make a regular habit for these small hits. The risk is defined and the rewards can be heavy. Of course, I use my call buyer's money to buy the other options. I never use my own original net cost basis. The idea is to continue to compound your gains in your profolio. Right now is when you must crank up the hits. Here are the current option prices for ROST. Check out the $1 change today for the May 27 1/2 Calls. Somebody made some real good money today! stocksmart.com Let The Trend Be Your Friend! Check out the chart for ROST. View One - Insert 50 days for the moving average, Candlesticks, and Bollinger Bands and press enter at stocksmart.com View Two - tscn.com Notice that there seems to be a pattern where ROST pulls back around April and May anyway! Here are the sectors with the strongest covered call writing opportunities can be found at stocksmart.com VIX VOLATILITY INDEX Here is another freebee. You can plot the VIX for a 50 day moving average to get a feel of the volatility at stocksmart.com That's It! Wishing all of you, the BEST OF GOOD BUYS! ********************************************************************************* DISCLAIMER: The writer is presenting a real stock and a live ongoing case study. No recommendations or endorsement to actually buy this stock are suggested nor implied. Trading stocks and buying calls should not be attempted without first understanding the risk/rewards of this type of investment! The writer assumes no responsibility for the opinions being expressed! Buyers always be aware! *********************************************************************************

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