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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 (2260)	5/17/1997 1:52:00 PM
From: J. P.	of 14162

Hi Herm, I'm wondering if you would once again share your thought processes on the selection of TECD? In today's IBD, TECD is listed 90 for EPS (good), and 44 for relative strength. The annual growth rate is 13% (which is kind of slow), and the company operates on a very slim 1-3% margin! PE is reasonable around 18 and earnings are fair at 1.35 per share. The current rating for accumulation by mutual funds is a "C". If you look at the options table, the liquidity is only fair. I've been long TECD about 4 months now, and the money that I've made on this stock has been from covered calling, my net cost basis is down to about 21 (which isn't great for the time I've held this stock!). With a split, the price of the options relative to the stock price will be much more attractive. The thing I like about this stock is the risk of a total meltdown in price is very reduced. Specifically, what causes you to be so bullish on the near term prospects of TECD? What would cause such a price increase as you have alluded to based on the prior performance of this company? Hope I don't sound like a smart aleck, I'm just trying to learn something!

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