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: Jon Tara who wrote (10797)	5/14/1999 5:08:00 PM
From: Herm	Read Replies (2) of 14162

Jon, The odds are in your favor as the CC writer. Rarely, will you be assigned unless you really want it to happen. That is not the most dangerous aspect of CCing. Look at number #1 below. Quick W.I.N.s. Review 1. Stock starting to move down [W]ithdrawing - The stock appears to be pulling back after a upward cycle. Technical indicators would be an upper BB tag, high RSI, positive Stocastics, peaking OBV. Write CCs at this point to lock in your profits and protect your downside. Use the BB and RSI as you guide. 2. Stock starting to move up [I]ncreasing - The stock appears to have bottomed out and starting to move upwards. Technical indicators would be lower BB tag, low RSI, negative Stocastics, low OBV just starting to turn up. Cover CCs and wait. Perhaps you can buy more stock or long calls as sideshows. Stock moves sideways [N]eutral - Hold your position. Defensive investor [S]ideshows - Buy cheap PUTs on upper BB tags for reversals off tops especially around earnings release dates. Buy cheap long calls after double-bottoms. Average down and leverage your CC premies to lower your net cost basis (NUT).

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