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

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To: Andrew Williams who wrote (7367)	4/28/1998 8:40:00 PM
From: Herm	of 14162

I started laying out a timeline of events which would impact the price movement. The next earnings release date is July 20, 1998. I would expect a CEO warning (if one is needed) some time in early June. The upbeat CEO comments this early in the quarter seems to be news directed towards boosting the stock price over the $35 overhead resistance point (the recent high). Rarely do stocks jump past the new high on the first rebound attempt. The greed sets in and profit taking results and the stock backs down. It usually takes two tries before the volume buying kicks in and the price gaps up. XRAY past chart history seems to indicate that pattern. So, as XRAY moves towards $35 the ( currently, XRQHG/TG 35 August @ 11/16 last, -1/16 today, 9/16 bid 13/16 ask 127 open interest)** would be the best bet. I would hold until then. The premie $ may reach 1 1/4 at the money. Then, watch the XRAY volume and RSI start to drop and the price movement will stall at that point pull back. You need to jump on the CC before the market notices the pull back. The volatility and intrinsic value will be at it's peak. If the XRAY pulls back 3 points to $32 you could cover for less than 3/4 and start the process over again. Otherwise, you can ride it out to August, keep the 1 1/4 premie and get called out at $35.00. Either way you make a nice little profit. NASDAQ: (XRAY : $32 13/32) $1,747 million Market Cap at April 28,1998 Trades at a 21% Discount PE Multiple of 20.3 X, vs. the 25.6 X average multiple at which the Medical Products SubIndustry is priced. Medical Products SubIndustry up 1.11% / Health Industry up 1.14% Today

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