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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Slava Chechik who wrote (7565)6/8/1998 9:15:00 AM
From: Herm  Read Replies (1) of 14162
 
Good Question Slava,

Companies must declare in a legal public notice upcoming stock splits. The record date is the start of the legal paper work. So, TJX shareholders on record (between now and before the close of June 30, 1998) will receive (from their brokerage firms) credit for each share owned up to the day before the actual split date of July 01, 1998.

So, if you own TJX you will get twice as many shares (2 for 1) but at half of the price. That is why I suspect that the TJX price is being driven up now to a new high. Whip saw price movements during stock split events are not uncommon. Therefore, if you are long on the stock and are planning to CC later, it may be wise to buy cheap protective PUTs at some point when the RSI begins to drop from it's peak. That will bring in some easy bucks since it is common to have profit taking before or after the split date. Once you have some profit from the PUTs in your account and the stock resumes it's climb after the split, a short term recovery spread may be the right CC combo. That's when you sell CCs (short) a few strike prices up and at the same time you use the premies to buy half as many long calls for yourself. The profit sure beats straight stock ownership and/or plain CCing.

Doug's web site gives can provide you with an excellent online "what if" profit potential. webbindustries.com .
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