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

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To: Mike Fredericks who wrote (7932)	7/24/1998
From: Herm	Read Replies (1) of 14162

Hi Mike, BB and RSI Indicators - Slant and Readings Let me add some more considerations to Doug's good reply. The PWAV RSI is still dropping (shallow)right downward slanted along with the BB and price. It may move sideways for a few days after today before PWAV continues to drop. Blowout Volume Increases The trading volume today pegged at 1,253,000 was more than 25% over the PWAV average of 631,546 to 693,700 that is being listed depending on where you read the numbers. In fact, the stock hit a low of $13 today. So, a dead cat bounce (Trader's bounce) price reversal/pivot from the overselling would not be out of the question tomorrow. But, that won't last and the volume will not match today's! You need confident buyers and with the EPS was just adjusted downward to .56 cents on 07/21/98 and a law suit, that may not come easy. CCing Defensive Moves! *"Let the trend be your friend!" "May the force be with your and not against you!* If you cover now at 1/4 you can turn around and execute another round of CCs by going two or three months out and one strike price down to grab a hugh amount of CC premie. With that money you can buy some cheap PWAV PUTs to hedge/leverage your drop! YOU ARE DEFENSE MODE - W for withdrawing price and second breath of fresh air before another price dunk. I would venture to say that the testing of the $9 -$10s of this past Feb. 1998. The PWAV P/E is only 2% below average. That's plenty of fat in a technology stock for all the savage shorting MMs and bad news sharks out there! "Perception becomes reality in the stock market." It is much easier to force PWAV down from here than try to raise the stock price. bigcharts.com NASDAQ: (PWAV : $13 5/16) $237 million Market Cap at July 23, 1998 Employs 305. Trades at a 2% Discount PE Multiple of 23.4 X, vs. the 23.9 X average multiple at which the Communications Equipment SubIndustry is priced. Protect yourself! Go defensive! Let your CC buyers pay your way! Thanks for another good learning experience!

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