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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Bazmataz who wrote (7414)5/7/1998 10:25:00 AM
From: Herm  Read Replies (3) of 14162
 
Good question Baz,

Put together as much facts as possible to build a case using the charts and technical indicators. Ponder this! Would you rather depend on only your "opinion" on how much gas is in your gas tank three days after filling up the tank? Or, would you believe more the readings on the gas gauge to accertain how much gas you really may have within 1/8 gallon give or take? You could based an opinion one way or the other. But, you and I both would agree that the gas gauge is much more accurate.

Likewise, the Bollinger Bands and RSI charts are end of the day facts plotted on a scale for your reading. You should be able to score 7 out of 10 times by depending on the indicators.

The sooner you act the more premies you lock in and the more margin for error on you side to cover. Time is on your side once you have that premie sitting in your account.

By the way, when you collect the premie(s) that lowers your net cost basis for the stock. It is possible to be assigned with a short turn loss on the stock, but, a short term profit overall because of the gain on the CC. Yes, that is the difference by being more aggressive during sideways or downward motions.
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