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: Leroy who wrote (4158)	8/27/1997 9:36:00 AM
From: Herm	of 14162

Well, step back and think about the forces at work here. A head with two broad shoulders. The head part is easy. A price spike that did not last. Ran out of buying momentum and sharp profit taking. The events around the stock is what causes it! For TRV it's the interest rate and the bond markets. On both the left and right sides of the spike (head) are mini attempts for the stock to rally but failed. So, those who jumped on board at the shoulders price level will bail out and the stock price will drop to the next support level previously established. If TRV falls below $60 today it will come to rest around $53-$55 which was the old support level! It will be a quick dip. The labor day weekend might just do it with light volume and the market makers have a field day slamming certain stocks. It is a head a shoulders pattern an absolute? Humm? I would lean towards an 80% yes, 20% no. Chart patterns get their names because they tend to produce the same results over and over. Are Bollinger Bands perfect? I would have to say in the extremes highs and lows their are pretty close to perfect. As compared to wishing or not knowing, their are a tool that you should not work without. CCing is more profitable when you use the stock movement to your advantage. And, I think you will become a much better stock picker if you pick up some charting knowledge. When I look at the IBD charts of the most recent highs I look at the starting point for that stock before the climb. If you learn what to look for you know when to jump on board, when to fold and get out, and when to average down!

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