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

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To: Shell R. Poust who wrote (10291)	4/10/1999 1:53:00 PM
From: Mark Z	Read Replies (1) of 14162

Two comments: I assume you had a typo and meant the 210's not the 110's given current prices (~$56) and that there aren't any May strikes below 150. Second, considering you have 20+k tied up in the stock per contract, that's about a 5% return. Letting the stock get called away and finding another candidate - or even starting over again with CMGI - might yield more. This assumes you're covering shares rather than another option. If you're spreading, pls disregard! BTW (and this isn't directed to you specifically Shell - I'm just using this message), here's some history of Preview Travel (PTVL), a stock I've been doing CC's on for the past 4 months. As an investment, PTVL hasn't been that great by typical internet stock standards although it is appreciating at a 45% per annum clip. As a CC vehicle, it has been magnificent. I've not used WINS on this per se until this past month, although if you look at the chart, the timing of prior moves has been somewhat coincidental with proper WINS strategy as I understand it. 12/8/98 Bought shares @ 17.88 12/8/98 Sold QUTAD, January 20's for 2.38 leaving nut at 15.5 1/7/99 Bought back QUTADs for 1.13 Sold QUTBDs for 3.13 leaving nut at 13.5 2/18/99 Bought back QUTBDs for .5 Sold QUTCDs for 2.75 leaving nut at 11.25 (as it turns out I should have let these expire) 3/2/99 Bought back QUTCDs for 3.13 Sold QUTDXs (22.5 strike) for 3.63 leaving nut at 11.75 but increasing potential call out price by 2.5 (again, I should have just let the QUTCDs run but I didn't foresee the stock dipping as far as it ultimately did) 3/23/99 Bought back QUTDXs for .63 per WINS strategy and waited for stock to move up. Nut at 12.38 4/8/99 Sold QUTEXs for 2.38 leaving nut at 10. The stock is only up about 3 points since I originally bought it although it made a trip to the 30's and then back down again when the CEO and CFO resigned to 'pursue other opportunities'. I'm expecting the stock to have another run up there when a new CEO is hired (depending on whom they hire) and am poised to buy buy 1/2 the cc's at that point. Until then, I like the stock as a CC vehicle because it just drifts in a very narrow range, doesn't appear to have a lot more downside to it and the CC premiums yield around 10% per month. PTVL is also occasionally rumored to be a buyout candidate but if that were to happen, I doubt I could move fast enough and would simply give up the stock. My total nut including commissions stands at $10.24 so selling at $22.5 would yield a two bagger in less than 1/2 year at this point.

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