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

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To: jw who wrote (8944)	11/5/1998 6:13:00 PM
From: Michael Hart	Read Replies (2) of 14162

[ Potential bottomed stock in early recovery ] Cabletron Systems (CS)Closed $13 1/8. High of $47 May of 1997. Low of $6 5/8 September 1998. No debt. $400 Million cash. $2 billion market cap. Still the number 3 hardware vendor in the LAN industry behind Cisco and 3Com with approximately $1.5 Billion run rate. Number 2 supplier of network management software behind HP. Making entries into WAN & routing markets while simultaneously adding indirect sales to what was primarily a direct sales company. These have been accomplished by internal development and aquisitions during the past 12 months. The stock is now driven both by a return to old revenues for two consecutive quarters ( meeting expectations ) combined with aquisition speculation. Assuming there is some sort of pullback from here (see chart) there should be another point of entry prior to a continued movement upward into the $20's by April of 99. Potential negatives include margin decrease, large employee turnover during period leading to recovery, nearly 100 % of upper level management replaced ( could be interpreted as a positive). Also some outstanding lawsuits outstanding due to the large decline in stock price in both 6/97 and 12/97. I've been using the "withdrawal" portion of W.I.N.S. for 3 years against this holding almost exclusively. My entry and exits have been driven by my familiarity with the company and it's stock patterns. I'm especially interested in seeing the thread take a look at this company as I am interested in using the BB and RSI technique to get more out of my CC trades. I have not had any problem making money with CC's but I find in looking back I always get into and out of a position siginificantly early and pocket only about 50% of what I could have gotten had I paid attention to the BB and RSI technique. Rather than post all relevent information I'll let the thread take a look at the standard overview of the company, industry, stock etc. SI Thread: exchange2000.com Chart: iqc.com ------------------------------------------------------- Herm, Even if the thread does not wish to use the company could you give some insight on the following: Your W.I.N.S. approach would seem to scream that CC's be sold anywhere during the past week on CS ( penetration of upper BB's and RSI approaching 80 ) but I'm confused about how you interpret a potential "breakout" which would hold you back for a time period. Next earnings are due in December and could cause a breakout if CS exceeds by any amount. Do you wait for a pull back from the upper band combined with a continued high RSI ? Please take a look at the chart and let me know what you think. Congratulations on a great thread. Thanks Mike

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