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: Robert H. who wrote (9408)	1/10/1999 12:11:00 PM
From: Herm	Read Replies (2) of 14162

Hi Robert! Welcome to the forum! I got a chuckle when I read your post indicating that you held 81 CCs of 126 calls of a strike price. WOW! My second thought was that you managed to make a profit on a depressed stock which at this point has more upside potential than downside. Paul Heye in post #9393, Friday, Jan 8 1999 brought FLC to our attention. I wrote,"FLC has a 34.24% growth rates and is selling cheap. NYSE: (FLC : $8 11/16) $1,678 million Market Cap at January 7, 1999 Trades at a 23% Discount PE Multiple of 7.2 X, vs. the 9.4 X average multiple at which the Drilling & Marine Supply SubIndustry is priced. Check out the upper BB which has been tagged. FLC has a tendency to keep tagging upwards and drag the upper BB which it is doing now. Meaning? Higher prices for a short term. Nice open interest in the options strike prices! iqc.com For the sake of the readers, I have some observations I would like to ask you. First, do you employ charting reading skills? Your timing on this FLC trade was very good. Second, have you been CCing before? I like the way you used the time value of the CCs and strike price to grab huge premies to do your hard work of levering and protecting your downside as well as generating a nice upside profit potential. Very astute strategy! Third, is any part of the long stock purchased on margin? I suspect it's not and you are in a solid position because if FLC starts to gap upwards and passes your 12 1/2 strike price your portfolio will raise in value and you could still dip into margin from that capital appreciation and buy long calls to sweeten the take! You could employ the repair strategy. Doug's web site has a calculator you could use @ webbindustries.com. Tell us more stocks you like at this point Robert. Thanks!

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