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

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To: Casaubon who wrote (9527)	1/26/1999 10:15:00 PM
From: VincentTH	Read Replies (1) of 14162

Casaubon, I owned TDFX for a long time, still holding after all these times. I have averaged down from $24 to around $15.5 now, still hoping for a breakout. Looks like TDFX is doing the right thing towards being the high-flyer again. That said, there are still some tough time ahead. You have 2 moves to make here, with a cost basis of 15.25: 1. Looks for TDFX to break out tomorrow on good earnings. Sell the $15 strike call into strength. A higher strike price may be more desirable, depending on how the stock behaves tomorrow. Be warned that TDFX has the tendency to jump on earnings only to drop back after earnings. Last July TDFX announced $.5x vs $0.45 First Call consensus, but the stock still dropped because the expectation was $0.80!!! 2. If you expect the stock to move higher, and you plan to hold the stock beyond March when the merge is finalized, I would say buy the equivalent STBI shares at the open, then sell TDFX for a profit tomorrow. This arbitrage play brings you +8% return right away. I wish I have more dry powder to play. My 2 cents, //V

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