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: Gary E who wrote (9789)	2/28/1999 9:03:00 PM
From: Herm	Read Replies (2) of 14162

Hi Hal, Good question Hal. One of the built-in rules or assumptions when applying the WINs approach is that you monitor the price movements using the two technical indicators. That is, the Bollinger Bands (BB) and the Relative Strength Indicator (RSI) for each stock you own or are considering owning. Once, you have a working knowledge of the process, applying WINs is straight forward and any investor that took the time to learn about WINs can jump on board any stock and know how to anticipate the extreme pivots. So, with that said, I'm only confirming what should be the thought process at this point after the CPQ dump. CPQ split 2-1 last year on Jan. 20, 1998. Any split increases the float. Increased float requires more trading volume to keep the stock afloat. The float turnover (TRO) even changes the charteristics of the stock. Now Hal! This WINs works so well that if you take a look at the chart below you will notice that the CPQ price was heading towards the upper BB and AT THE SAME TIME THE RSI WAS DROPPING! That is a classic early warning of a dump. How can the stock price go up and the strength continue to drop? That was the MMs shorting the stock at higher prices before the panic was set off. iqc.com So,in summary! Don't apply WINs and you just loss your shirt! Play the game this way and you will rarely have sleepless nights and major hits. It only takes one to set you back big! Thanks for your watchful eyes and spot checks! :-)

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