Greeting Gary,
For the sake of readers (lurkers) that check out this forum, I want to provide some links to information on technical indicators that are very useful in determining the best time to write or cover CCs. Improving your "batting average" is no accident. There are clues that every stock will provide to the astute investor if you ONLY LOOK!
Personally, I use four different indicators to based my buy/sell decisions. That is, in addition to public news/information (earnings reports, dividend pay dates, split dates, etc.) that ALTERS THE FUNDAMENTALS!
The four indicators are basically used as paired indicators. Like youe automobile dash board, you can see the speed and RPM gauges. Well, for me that is the Bollinger Bands (how much has the price moved up or down in points?) The RSI tells me the RPM of that price movement. Crank up the RSI and the price will move towards the upper Bollinger Bands. Back off on that RPM (RSI), and eventually that upward movement will peter out and back off (profit taking). Put the car in reverse and crank up the RPM (dropping RSI) and you will see that price drop like a rock and head towards the lower Bollinger Band.
It's that simple!
Please review the following info. You need to learn to read the chart and look at both indicators to pinpoint the charts direction. You can plot the two indicators for free at bigcharts.com. In fact, you can email yourself the charts every night for FREE!
equis.com
equis.com
The other two indicators I used as a pair are 50-day moving average indicator with the volume indicator. There chart patterns that clearly signal stock movement. The "bounce" off the 50-day average is one of the most consistant chart patterns. If a chart pattern breaks below a 50-day moving average, it is usually an early sign that the stock is heading towards trouble and may most likely hit the 200-day average. Knowing this in advance allows the investor that choice to buy puts or sell deep in the money CCs to protect his/her position(s).
equis.com
equis.com
In conclusion, technical indicators don't work in a vacuum. Every stock has fundamentals that MUST FIRST BE CAREFULLY DETERMINED! You can make money with stocks that go UP or go Down! For CCers, we are primarily interested in normal upward moving stocks in order to sell the CCs and collect premies. But, if the fundamentals change you must be able to know when to BAIL OUT! William O'Neal's CANSLIM methods is the easiest way to learn about fundamentals. The charts are historical facts and tend to repeat OVER AND OVER. On the other hand, the stock's fundamentals will dictate how the price moves and the public accepts or rejects the asking prices.
equis.com |
