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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Greg Higgins who wrote (10997)	6/8/1999 10:51:00 AM
From: Herm	Respond to of 14162

Hi Greg, Thanks for your input. You realize that the stocks I listed were all electric utilities which generally have much lower volatility. RN and HNZ have other reasons for carrying more risk. Tobacco law suits in RN's past for one thing makes it a rock n roll stock. When it completes the spin off of the tabacco part it will be a totally different corporation. As far as HNZ, check out below the P/E recently. Only now is the P/E starting to coming in line. HNZ only has a 10.47% growth rate. It is overvalued in the first place. I personally don't believe in dividend stripping. I think the risk far outweighs the generated gains. Perhaps in the old days, i.e., before this decade, it made sense. Today it does not. The risk from holding a stock is much greater due to the higher market valuations. NYSE: (HNZ : $49 1/8) (HNZp : $760) $17,954 million Market Cap at June 8, 1999 Ranks 147th in the Fortune 500 on Revenue & 127th on Profit. Employs 43,300. Trades at a 3% Discount PE Multiple of 20.6 X, vs. the 21.3 X average multiple at which the Food SubIndustry is priced. By the way, HNZ is due out with dividends. Ex div. is on June 18, 1999 with .32 cents. iqc.com The point I'm suggesting is 1. electric utilities will be slow movers anyway and the CCs will add much $$$ spice. 2. Applying WINs to those should be no sweat in handling declines in those types of stocks. Even the HNZ decline would have been managable if one would be working the stock with defensive CCing routine. iqc.com I recall when I recommended RN back in April I believe it was. At that point RN has completed a double-bottom and was real cheap. It has been riding high ever since the announcement to dump the tobacco part.

To: Greg Higgins who wrote (10997)	6/8/1999 10:52:00 AM
From: Herm	Respond to of 14162

Hi Greg, Thanks for your input. You realize that the stocks I listed were all electric utilities which generally have much lower volatility. RN and HNZ have other reasons for carrying more risk. Tobacco law suits in RN's past for one thing makes it a rock n roll stock. When it completes the spin off of the tobacco part it will be a totally different corporation. As far as HNZ, check out below the P/E recently. Only now is the P/E starting to coming in line. HNZ only has a 10.47% growth rate. It is overvalued in the first place. I personally don't believe in dividend stripping. I think the risk far outweighs the generated gains. Perhaps in the old days, i.e., before this decade, it made sense. Today it does not. The risk from holding a stock is much greater due to the higher market valuations. NYSE: (HNZ : $49 1/8) (HNZp : $760) $17,954 million Market Cap at June 8, 1999 Ranks 147th in the Fortune 500 on Revenue & 127th on Profit. Employs 43,300. Trades at a 3% Discount PE Multiple of 20.6 X, vs. the 21.3 X average multiple at which the Food SubIndustry is priced. By the way, HNZ is due out with dividends. Ex div. is on June 18, 1999 with .32 cents. iqc.com The point I'm suggesting is 1. electric utilities will be slow movers anyway and the CCs will add much $$$ spice. 2. Applying WINs to those should be no sweat in handling declines in those types of stocks. Even the HNZ decline would have been manageable if one would be working the stock with defensive CCing routine. iqc.com I recall when I recommended RN back in April I believe it was. At that point RN has completed a double-bottom and was real cheap. It has been riding high ever since the announcement to dump the tobacco part.