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: Spots who wrote (5426)	10/14/1997 7:35:00 AM
From: Herm	of 14162

Spots, I'm glad you pointed out your net cost basis (nut)for the rest to see that it is possible to repair a damage entry in CC writing. Albeit, VVUS is a high turnover float stock (TRO) and moves very fast up and down because of that volume. Hence, the options are very high in cost and percentage. That's good for a CC cowboy if you want to rack in some heavy premies or deadly if you get behind and don't have the skills to make repair quick. That is one reason why I know Wade Cook's seminars and followers lose money in the CC game. They freak out when the stocks don't go up or sideways! In reading the VVUS chart you can expect a bounce before Friday. 1. VVUS is approaching the 50-day moving average and it should bounce up because there is no fundamental reason for VVUS not to bounce. 2. Setting the Bollinger Bands to 10-days indicates VVUS should touch the lower Bollinger Band today or tomorrow. As far as I can see, VVUS ALWAYS seems to reverse at that point. 3. RSI is approaching the 30 reading today or tomorrow. Again, another indicator for our timing. Summary: 1. Find a low point soon and unload your PUTs for a nice quick profit! 2. Dippity Doo (cover you CCs) at a low point and wait for the bounce back. I covered my NOV. 40s yesterday and sold off my OCT. 35s at the peak of the day. I feel much better now that I have my money back that I can count on! 3. If you feel aggressive, buy the VVUS Nov. 35s or Nov. 40 CALLs for a sideshow or to exercise later. Don't forget that the UK deal should be in this next earnings report and that should boost VVUS. Also, you know the stock is going to test the new 52-week high of $41.50 just reached last week!

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