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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Douglas Webb who wrote (4206)8/29/1997 10:41:00 AM
From: Herm   of 14162
 
Alright Doug, We are getting close! FLOAT: The number of shares outstanding of a particular common stock. When a stock splits and increases it's float, that event changes the dynamics of the stock price movements and the time between the rolling cycles up and down. If you and I ate and put on 40 lbs. of weight, it's safe to say we would be more sluggish as a result. In other words, we could not run the 1/4 mile in the same time as before the weight gain. In like manner, splits add more shares to the float and change the characteristics. I would like to seek a calculated measure between stocks based on the turnover of their float as in the number of days. Also, the monthly percentage of change of the float. So, a stock that trades 30% of it's float vs. only 5% in another stock will have a bigger price swings because the larger float turnover to move that stock. As far as your formulas. You must be consistent in your units. In other words, stick to millions of shares. So, 375,000 divided by say 50,000,000 yields .0075. 20 trading days x .0075 = 0.15% of the float. That .15% we can compare fairly easy. Average 3 month daily average might give a better picture.
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