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: Herman J. Matos who wrote (306)	3/4/1997 7:17:00 PM
From: Herman J. Matos	of 14162

.HOW TO WRITE COVERED CALLS - A REAL CASE STUDY! ================================================================== ............................Date: Tuesday, March 04, 1997 Well, tomorrow March 05, 1997 is the 2-1 SPLIT DATE! ROSS STORES (ROST) has been acting FANTASTICALLY! We got a hot stock split folks! For the week ROSS is up a total of 1 5/8 and closed at $49 5/8 or + $5 5/8 since we started tracking the stock around $44.00 some three weeks ago. For those of you that purchased the March 40 calls they were selling like hot cakes today for $1,000 each. My March 40 calls at 6.250 each are worth 60% more than I pay for them three weeks ago! But, I will take possession of the ROSS shares after the split when I exercise my rights to purchase the underlining stock! Some poor soul is going to get pinched! NEXT WEEK we have the increased dividend payout! STOP! Did you hear that? That was the sound of that money machine pinging away! The week after that we will have the next earnings report! I guess I will have enough money this month to run into my local ROSS store and help the figures somewhat! Talk about vested interest! VIX Volatility Index: The VIX was up today by +.750 to close at 22.80. The bonds have been a real pain this week and hopefully Greenspan will keep his mouth shut tomorrow. I understand he is speaking in public. He has been ducking from all the tomatoes people are throwing at him lately! When is this dude going on his honeymoon? 10 Year Treasury Bill: For the week the 10 Yr. T-Bill is up another +.010 and closed at 6.560%. This is the only index that is really making me take notice. It has a little ways to go before crossing over the 300 day average which stands at around 6.7% . If it does it would trigger a major market pull back of 5% to 10% off current levels. Sort of a repeat of last July technology melt down! This time I think it would drag the DOW stocks 12% lower before the bargain hunters come out of the woodwork! In that case, as covered call writers we need to cover and if you are in a profitable position. I WILL tell you to SELL AND GET OUT! If you are confident and quick, you can sell two or three strike prices lower and one month out in the money calls and GREATLY cushion your drop with your call buyers money! The only way to do it! Make your call buyer pay for your insurance! See Ya! ********************************************************************************** DISCLAIMER: The writer is presenting a real stock and a live ongoing case study. No recommendations or endorsement to actually buy this stock are suggested nor implied. Trading stocks and buying calls should not be attempted without first understanding the risk/rewards of this type of investment! The writer assumes no responsibility for the opinions being expressed! Buyers always be aware! **********************************************************************************

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