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

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To: Jan Ravi who wrote (10166)	3/30/1999 12:02:00 PM
From: Herm	Read Replies (2) of 14162

OTEX is really taking care of business! With a 45% annual growth rate and a P/E that is just about fairly valued at this point. OTEX reached a new 52-week high of $31.75 and has attempted to make a new high. The current RSI is high and showing signs of dropping off as the price continues to move upwards. Caution! The fading into the rush by the big boys has started. Check out the ticks below as of this writing. The upper BB is moving upward and the gap between upper and lower is getting wider. More price upside is possible as we get closer to the next earnings release date of April 22, 1999. The last one was a major blowout to the upside in Jan. 1999. OTEX Trading Summary 30-MAR-99 as of 11:00 AM only! Ticks Money Flow($MM) Avg. Price Small Blocks +27 -17 +0.7 -0.3 26.7449 Large Blocks +3 -1 +0.8 -0.3 26.6250 Total: +30 -18 +1.5 -0.6 26.7102 29-MAR-99 Ticks Money Flow($MM) Avg. Price Small Blocks +98 -82 +2.0 -2.5 25.6962 Large Blocks +3 -1 +0.8 -0.3 25.8438 Total: +101 -83 +2.8 -2.8 25.7124 NASDAQ: (OTEX : $29 3/16) $517 million Market Cap at March 30, 1999 Trades at a 3% Discount PE Multiple of 45.9 X, vs. the 47.3 X average multiple at which the Software & Services subIndustry is priced. iqc.com CONCLUSIONs? If you are long on OTEX it looks like this stock will be cranking out some earnings in the future. It looks good! Now, I'm a little concern about the lack of open interest for many strike prices. Keep an eye on the OTEX 25 MAY CALL @ 6 1/8+ as a possible CC when you are ready. On a pull back a CC at a strike of $25 would be real nice premies and enough time remaining to see after the earnings release on April 22, 1999 and the dust settles. The stock has a moderately fast float turnover Rate of 32.24 Days. So, I think you are seeing the expectations being priced into the earnings expectations right now! I can't see the OTEX's RSI moving much further upwards at this point in time. Past history for this stock indicates this is the upward overbrought level. The bucks are on the table and profit taking may set in soon. Lower price support is at around a solid $23. If you do go for the CCs you can use the bucks to buy cheap puts or if it gaps to buy long sideshow calls. Either way, you have your beacon protected.

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