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

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To: the options strategist who wrote (8659)	9/21/1998 6:21:00 PM
From: Herm	Read Replies (1) of 14162

Hi Everybody! REVIEW OF BTGC Let's take a closer look at the last 24 months BTGC chart. First, you can see from the chart how many investors hold BTGC at much higher purchase price than the current $7.00+. Prediction: Those investors may very well sell BTGC when it reaches their purchase price. Why? When your stock goes down (the majority of investors) will feel pain and uncomfort and they will be looking for the next break to get out! Their pride will dictate that action in order for them to save face! Second, you can bet the big money shorted BTGC against the box and rode BTGC down to $4.50 and then started to cover their short positions. That covering created the recent short squeeze and upward BTGC price gaps last week. The volume is now dropping back to normal. The recent news plug and the fact that no CEO pre-earnings warning has been announced means that BTGC is right on target for this year. Until it is announced in late October and it becomes part of the record BTGC will move according to BTGC normal trading pattern. That pattern is in black and white below. askresearch.com Note! BTGC has more than tagged the upper BB and the RSI is very high. Only in 1996 did BTGC continue to climb and climb even when the RSI dropped off. BUT! You will note the angle of that climb was slow and steady and the news being released one after another was the fuel for the steady increase. Compare the current sharp RSI climb and you can understand the price increase was a delayed technical bounce off the new 52-week low of $4.25. The short covering pumped up BTGC. Sure, the MMs took the path of least resistance! Cheap price and short interest means a stampede eventually. The MMs profit is in the volatility and the whipsaw movements. Rarely, will you get a new 52-low bounce and total recovery in price so after. A more common respone is a nice increase off the bounce followed with quick profit taking and eventually a gradual recovery. Without great news BTGC will go back to normal trading patters.

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