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: jim clabaugh who wrote (5377)	10/9/1997 7:34:00 PM
From: Herm	of 14162

Well Jim, Let's step back and look at the fundamentals and T/A fact for a moment. I know I don't like giving back a few grand of earned profit. VVUS has become a popular momentum trading stock. Meaning? There are daytraders jumping in/out for quick points. Also, there is large institutional ownership in VVUS. When you combine the two you have a TRO that is what it is. A quick to the draw and forceful price mover. That's the nature of this beast. Many small investors late to the party exited today. There is more action to come! Plenty of CALLs are sitting out there! The prices are cheap right now considering the VVUS potential. If you have a small profit in VVUS and you are being called out at $30.00 stay there and cash out! If you are going to go in the red by covering you should think long and hard. If you are about to lose ground, then I would say cover and write another round at the $40 strike price out two months! Grab as much premie money as you can! If the drop continues you will be cushioned. If it bottoms and starts to reverse you could alway cover again and hold off writing CCs since the stock will be rising.

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