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Strategies & Market Trends : The Covered Calls for Dummies Thread
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From: Jerome3/26/2006 7:28:39 PM
   of 5205
 
Some possible covered calls to watch for this week. We are now down to 4 weeks in this trading period.

GM if it moves up to 23.50 then the 25's for April would be a good choice.

MOT purchased under 22 1/2 would also be a good candidate.

AMAT under 18 with a likely pop to 18.50 would make the 19's for April a good candidate.

WMB and CHK purchased under a near strike would also be a good write.

A decent idea for short term traders would be this. Buy a stock that you think is far undervalued for whatever reason. Then after the purchase if the stock rallies about 5% over your purchase price then sell it. If the stock fails to rally then write a covered call against it. This entire scenario should play out in about 5 days. I have unburied myself many times on a stock by doing this. Most recently with TXN and CHK.

The energy stocks are neat in that they rally for no good reason on any given rumor.They present many opportunities for covered call writes and often the dividend is another plus.

JMO....Jerome
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