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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: RCVJr who wrote (5142)10/2/1997 8:34:00 AM
From: Herm   of 14162
 
Nice Score RCV! I looked at the MUEI chart and set the Bollinger Bands and RSI indicators to a closer 10-day moving average. The MUEI RSI dropped below 30 only three times recently. It is very close RIGHT NOW to dropping below the 30 RSI again. So, you are close to a pivot point as we speak. The Bollinger Bands indicate a bottom price support in the $16 - $17 dollar range. A limit sell @ 3/8s to 1/2 to cover your CCs may do the trick. The 50% retracement of the CALLS should be the min. profit you should take (meaning you need to be in sync with the movement). But, it all depends when you sell the CC in the first place and how far the price drops afterwards. For example, if you are late in selling the CC (when the volatility is higher) and the price is coming off the top (high RSI above 80 and upper contact with Bollinger Bands)you may or may not realize a 50% profit before having to prepare to cover in order to get ready for the price reversal. In other words, your profit you are seeking and the timing may not jive all the time. Therefore, you need to watch somekind of indicator in order to enhance your profits in the long run (real serious option traders use the implied volatility as their indicator). I know it's hard to not watch the profit. How many times did I say, "just one more 1 point and I will be satisfied and get out." Yeah, you guess it! I gave up more than I would have earned waiting for that last point.
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