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: Riskmgmt who wrote (9016)	11/12/1998 8:05:00 AM
From: Herm	Read Replies (3) of 14162

Thanks Ray for some interesting stocks. CTXS - Very Nice BB and RSI Pattern Looking CTXS you will see some very dependable BB upper and lower tags with the corresponding RSI peak and low readings. Currently, CTXS has already tagged the upper BB and the RSI has dropped off. Result? CTXS price will most likely move downward or sideways until it tags the lower BB. Those who own CTXS should have CCs sold at the money and a few months out! Folks! The more months out your sell those CCs the more money you will grab and the more time you will have to hit your mark of a profit! Here are some other rationales for CCing out a few months. If CTXS moves sideways you will have a no sweat waiting period. Time is on your side! The CC premies are in your account! If you are not on margin your brokerage will pay YOU interest on that money! As time rolls by those CC CALLs will decay and give you the opportunity to buy them back at a fraction of what you collected. Thus, you may be able to do another round of CCs. In addition, the more CC premies in your account the MORE DOWNSIDE protection. You are hedged and it does not cost you money basically. Your CCer pays for your insurance and you get to sleep at night! CC premies in your account gives you more margin, more working capital to keep your other stocks out of trouble or jump on an opportunity! That is how you work the account keeping the cash flow and tweaking here and there to maximum overall profits! In short, it gives you more margin for errors. That breathing space will give you more confidence when making trades. Fear and greed will kill you in this game! If you are restless because YOU NEED TO MAKE A PROFIT you will most likely make stupid mistakes and move from speculation investing to gambling. If you want to shoot craps or play black Jack, go to Vegas! Me? I want to hold onto my money for the San Francisco and New Orleans trips I have coming up! askresearch.com SUNW - RSI Pattern Falling Before Price - TIMBER Ray's sharp eye found SUNW as the RSI drops off before the price. This stock is reversing! Again, CCers should be in place now for the ride downward. Money in the bank as you wait it out! SUNW looks like a reasonable short or PUTs stock at this point. Heck, there is more pullback downside than upside at this point askresearch.com Now, I wanted to see the actual P/E value for SUNW which has a 18.22% growth rate. So, with a P/E of 22.8 it is just about fairly priced at this point until SUNW increases their profit margins. SUNW. NASDAQ: (SUNW : $62 15/16) $23,216 million Market Cap at November 11, 1998 Ranks 187th in the Fortune 500 on Revenue & 171st on Profit. Employs 17,400. Trades at a 26% Discount PE Multiple of 22.8 X, vs. the 31.0 X average multiple at which the Computers SubIndustry is priced. CSCO askresearch.com

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