How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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

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To: Joe Waynick who wrote (8224)	8/15/1998 10:55:00 AM
From: Herm	Read Replies (2) of 14162

REVIEW OF THE CCing PROCESS: Some basic concept around How to W.I.N. When Writing Covered Calls! W=withdraws I=increases N=neutral 1. W - When the price is peaking (price touches upper BB and high RSI) and on the verge of (W)ITHDRAWING: a. Sell CCs at or in the money! (Bread and Butter) b. Buy cheap PUTs and/or short the stock! (sideshow) c. Cash in long calls! (sideshow) 2. I - When the price is bottoming (price touches lower BB and low RSI) and on the verge of recovery and the price is (I)ncreasing: a. Cover your CCs! (Bread and Butter) b. Buy long calls!(sideshow) c. Sell in the money PUTs! (sideshow) d. Buy cheap warrants if offered (sideshow) Warrants over $5.00 can be purchased on margin! 3. N - When the price is moving sideways, do nothing but watch! a. Watch the upward/down slope of RSI! Hint - RSI will give you a small lead in the direction of the stock price. b. Watch the earnings dates, options expiration dates, and the closest strike price. Note - Most MM shakeouts come the week before options expiration week. c. Watch for split announcements or mergers. SUMMARY: Sell (write) CALLs - Buy PUTs Buy CALLs - Sell (write)PUT

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