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: Andrew Williams who wrote (8290)	8/19/1998 8:58:00 PM
From: Herm	Read Replies (2) of 14162

Looks like another one hanging on vapors! Another Bear Trap! Good hunting Andrew! P/E OVERVALUED BSX has a growth rate of 24.35% vs. a whopping 42.9 P/E when the entire industry group has an average 27.3 P/E. NYSE: (BSX : $81 1/8) $16,247 million Market Cap at August 19, 1998 Ranks 706th in the Fortune 1,000 on Revenue & 425th on Profit. Employs 9,320. Trades at a 57% Premium PE Multiple of 42.9 X, vs. the 27.3 X average multiple at which the Medical Products SubIndustry is priced. TECHNICAL INDICATORS BSX has tagged the upper BB and the RSI is not quite as high as in the past. It is making a new 52-week high previously set in late 1997. BSX fits the W.I.N. profile. BSX should pull back soon. BSX also trades LEAPs which is a nice way to own BSX for CCing against the LEAPs at a fraction of the price of the stock. You could buy twice as much and make double CC premies by owning the LEAPs. Not to mention, you can still buy PUTs and CALLs as a sideshow for the LEAPs. SHORT INTEREST vs. TRO That value seems to correlate with the Float Turnover (TRO) of BSX shares. 191.40 days TRO is one slow moving stock. If you take the 191.40 TRO days / 10.82 days worth of short interest = 5.65% of the TRO. That 5.65% can now be compared to other stocks. In other words, apples to apples. Since, every stock has it's own turnover rate and short interest level varies. They refer to it as ratio. So, if you see a ratio of 20 vs 10 in another stock, so what? If you know the TRO and then apply the ratio of days, you now know how much the short interest really represents in the TRO. That will give you a good clue as to how much price drag it will place on the stock by the increased liquidity when you short a stock, or the flip side of how much potential is really there for a short squeeze. I'm preparing more information in a little comparison this week. CHEAP PUTs With this BSX new 52-high I can see BSX moving down rather than up from here. A bottom of $60 would be my guess. The BSX PUTs Sept. 60 @ 1/4 for aggressive investors or PUTs Nov. 60 @ 3/4 for worry warts. :-) Just kidding! It may be safer with the extra time! bigcharts.com

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