How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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

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To: Steve J. who wrote (5198)	10/4/1997 9:19:00 AM
From: Herm	of 14162

Steve J, There seems to be alot of sideways motion with WNDR most of the time. Although, WNDR has been climbing recently to a new high. The stock has not tested that 52-week high. So, you can expect at least two attempts. The first of which will most likely NOT succeed. Based your CCing on that statistical fact. The other major events are the earnings date and options expiration date. You should expect some increase a month or so before the earnings date. At that point you could write CCs at a strike price that will depend on your net cost basis. I would aim for the either the closest strike price near the 52-week high one month out or at the money strike price in order to raise the delta of the option and have it erode quickly. The at the money call would have to be written at a the highest price raise just before the earnings date. Of course, I'm assuming you have a nice profit from the recent increase and you are willing to give up the stock. There is not much of a short interest in the stock 1.22 days and it moves kind of slow at 28% monthly float turnover for 77 days to turn 100% of float. This is no race car stock.

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