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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Zach E. who wrote (4865)	9/18/1997 2:02:00 PM
From: jim clabaugh	of 14162

zach, i think you hit on it in paragraph one. what am i and why - bullish or bearish? i'm bullish and have been expecting a split for several months. the bear part says, "look at the earnings premium when compared to the industry sub-sector" - currently at 41% with a P/E of 27.2 vs. 19.3. that scares me. i'm getting so many conflicting messages that i don't know what to do. example: monday night, my charts said "wait one more day of VVUS downtrend, buy back 30c and write 27.5np." by the time i logged in on tuesday, it had rebounded (never went lower from monday close) and the 27.5p was $1 lower, the 30c was higher than i had rec'd, and neither were in my risk profile any longer. now, i'm sitting on oct.30c and the stock seems to be heading for the moon. i never object to a profit, but it's hard to be sitting still for a month waiting to collect it. anything can happen. sometimes i wish we could force the call buyer to exercise <g>. i know i should have bought oct.35c as insurance against runaway, but that's hindsight (which is always better than my foresight.) so i'm looking at TECD. i had expected it to fall back off the 43 when i sold the 45c and i'd buy them back. but it keeps going up. can't believe that earnings premium. the market must be expecting a much higher earning this quarter than the analysts are projecting. i'm sitting in the same situation with ROST - sold the oct.30c and the stock is at 35. i guess i'll end up letting the stocks go and then i'll watch the charts for a pull back and re-enter with calls. of course, look at ROST's BB chart - it keeps pushing the upper band higher and higher. where is that over-bought condition anyway? cheers, jim.

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