HOW TO WRITE COVERED CALLS - A REAL CASE STUDY!
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Date: Thursday, May 22, 1997
The 1st stock: ROSS STORES (ROST) Last traded at $28 1/8 down -3/8 (-1.3%)on a VERY LIGHT volume of 292,600 shares. Crazy as it may seem, ROST had release an announcement of a June 13, 1997 dividend record date. Now, today is the start of the Memorial Day holiday for some. Monday the markets will be closed. I would bet that Tuesday will be an up day for ROST, TECD and the overall markets. Also, ROST should continue to rise in price through June 13, 1997 as buyers purchase ROST to "buy the dividend." Future action? The ROST stock price will go up and most likely drop right after the dividend payout. Hint! Buy the PUTS at that point and enjoy the small down blip for some extra cash. Sell the PUTS and turn around and buy the CALLs for the trader's rebound.
ROSS STORES ANNOUNCES QUARTERLY DIVIDEND
NEWARK, Calif., May 22 /PRNewswire/ -- Ross Stores, Inc. (Nasdaq: ROST)
announced today that the company's Board of Directors declared a
regular quarterly cash dividend of four and a half cents ($.045) per
common share, payable on July 7, 1997 to stockholders of record as of
June 13, 1997.
Ross Stores, Inc. reported sales of $1.7 billion in 1996, its most
recent fiscal year. The off-price retailer operates 315 stores in 17
states, offering first-quality, in season, branded apparel, accessories
and footwear for the entire family as well as gift items and linens for
the home all at everyday savings of 20% to 60% less than regular
department and specialty store prices.
SOURCE Ross Stores Inc.
-0- 05/22/97 /CONTACT: Katie Loughnot,
Director, Investor Relations & Assistant Corporate Secretary of Ross
Stores Inc. 510-505-4509/
(ROST)
CO: Ross Stores Inc. ST: California IN: REA SU: DIV
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ROST OPTION PRICES:
ROST stock price has been fairly stable the past week. Sort of going up and down within $26 - $29 range. That's great for covered call writers because the time eats up the values of the calls and you have more opportunities to sell covered calls at different strike prices while lowering you net cost basis. Here are the current option prices for ROST from stocksmart.com
TECH DATA (TECD)
The 2nd stock: TECH DATA (TECD) Last traded at $26 3/8 down +5/8 (+2.4%)on a VERY NICE volume of 832,300 shares. The last sale of the day was on an up tick of a block of 1,000 shares. Needless to say, TECD is moving nicely to the upside towards the $30 level. I'm locking in some of my premies on my June 30 covered calls and will be covering today. I believe the stock price will continue to move up and may gap up on Tueaday when all the serious traders return from the long Memorial Day weekend. I CAN'T WAIT! I'm tempted to buy another 100 shares of TECD today on weakness since I believe most investors and traders will be leaving town early to be with family and friends.http://www.stocksmart.com/ows-bin/owa/ezgraphs.d?symbols=TECD
Let The Trend Be Your Friend!
Check out the chart for ROST. Insert 50 days for the moving average, Candlesticks, and Bollinger Bands and press enter at stocksmart.com
Notice that pretty good. The stock price is in the center of the Bollinger Bands within a slow slope to the upside. Nice and easy covered call premies without heartburn! You can take your extra money and spice up your portfolio with TECD calls!
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!
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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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