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: dr. z who wrote (10483)	4/22/1999 7:36:00 AM
From: Herm	Read Replies (1) of 14162

Hi dr.Z, Trading ticks/blocks is a paid subscription at stocksmartpro.com. The question on IBM by Jeb. You would need to CC a strike price against the IBM LEAP of more than $180+$38=$218 in order to clear your cost for a profit IF you are called out. Reprint on Value of Knowing the TRO You take say three months of average monthly trading volume. You look up the company's float. You divide that float (# of shares) value by the average shares traded (3 months) and you will find the float turnover (TRO). You can do it for any stock and get the TRO value. Going into a split or news announcement, stocks with lower TRO values will always move up or down faster because of the massive turnover of shares. It is relative between any stock. CPQ the other day moved 27 million shares and the stock dropped 5 1/2 points (-13%)in one day. That is low TRO at work! On Doug's web page there is a TRO calculator. I gave him the idea for the formula after I learned about TRO from a paid subscription I sampled for a year. They used TRO to determine the measurement of the momentum of any stock. The longer it takes for the stock to trade 100% of the outstanding float the slower the price movements associated with the stock. The shorter, the more volatile the stock price movements. Tech stocks tend to have lower TRO numbers. Retails, etc. are middle of the road. Oils right now have slow TROs. etc. The point is, if you want to know how fast a stock will move up or down against you, check out the TRO. After a split the TRO tends to eventually slow down the stock price movements until it regains a new pace. More float, more trades are needed to move the stock. That is why small floated stocks move up and down by MMs and funds to the determent of the small investor.

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