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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 (4125)	8/29/1997 1:51:00 AM
From: Douglas Webb	of 14162

I've been looking at the reports available at tradepbs.com to calculate your rate of turnover equations. It seems like the necessary information is there, and I can write a cgi to parse it and run your equations. A couple of questions, though: First, what exactly is the float? It's not the number of shares shorted, is it? Second: Are you sure about your equations? Here's what I'm using: Rate of Turnover = Avg. Monthly Vol / Outstanding Float Days to Trade = Outstanding Float / Avg. Daily Volume Avg. Daily Volume = Avg. Monthly Volume * 12 / 260 The last one is for calculating the daily volume from the monthly volume, assuming there are 260 trading days per year. I ran these equations for a couple of stocks: Stock AMV (mil) ADV (thous) OF (mil) ROT (%) DTT (days) UGLY 0.30 13.85 11.10 2.70 801 INVN 0.31 14.31 4.30 7.21 300 VVUS 1.49 68.77 22.90 6.51 333 MSFT 7.40 341.5 731.0 1.01 2141 Does this look right to you? The DTT figures look much higher than I expected, given your explaination of what we're trying to discover. Doug.

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