You know Vol, I've gotten over 3400 hits on my CC stuff in the few weeks I've had it up. I'm glad it's popular, but I hope my service provider doesn't get upset about all the cpu time and bandwidth it uses. Loading that page causes the cgi to go out and load a bunch of other web pages, so it's doing a lot of work.
If it becomes popular enough, I might look into getting a feed from the markets, so I won't have to hijack other people's websites. I'll have to charge admission for that, though. Maybe I'll ask Wade how much I should charge. :)
Hey, that's a great strategy post you put up. Sooner or later I'm going to put a strategy page on my site; your post will be great material. Here's some additions you might want to think about:
Finding downtrodden value: I really liked VectorVest's value analysis page, which is why I linked to it from my page. They give you a recent price, and an estimate of what the stock is actually worth. I'm not sure how accurate their estimates are, but if they say the company is worth a lot more than it's going for, has a high growth rate, and positive ratios, then it's probably a good bet. Perhaps more significantly, if VectorVest says a company is an overpriced dog, you should probably stay away from it. I'd rather make the mistake of not buying a company that turns out to be good than of buying one that turns out bad.
Technical Analysis: On my TRO page, underneath the stock table, is a link to StockWizard. So far they're my favorite site for doing TA (and that link takes you to their charting applet without the annoying advertising you get if you load it from their site.) What I do is bring up a 3-month candlestick chart. Then, I hit the indicators button, and add Bollinger Bands to the candlestick chart. I use the default 20-days and 2 standard deviations. Then I hit the indicators button again, and add an RSI chart below the price chart. I use the default 14-day RSI. Now you have all the info you need for TA.
If the stock has bottomed out, it's price will be on or near the lower BB, and RSI will be below 30. I'm pretty sure you don't want to buy stock or cover options until the price starts rising and RSI crosses upwards past 30. One problem with this is that you really want to buy the day before this happens, since the charts aren't updated until the end of the day, and the breakout may be steep.
When the stock is at it's peak, it will be against the upper band, and RSI will be above 70. You can expect the drop when the price falls away from the band and RSI crosses down past 70. This peak is where you want to write your calls. Again, you really want to write them the day before you get this signal to maximize your profits.
An interesting fact about the BB chart is that the spacing between the bands depends upon the stock's volatility, and therefore gives you an idea of the option prices. When the bands are far apart, volatility will be up, and options will be overpriced. This is a good time to sell them. When the bands are close together, volatility is down, and options will be fairly priced or underpriced. This is a good time to buy them back.
Doug. |
