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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: Herm who wrote (11213)	7/17/1999 4:13:00 PM
From: Skipperr	Read Replies (1) \| Respond to of 14162

Thank you, Herm, for the very nice welcome: Welcome Skipperr to our forum! You have the exact attitude and friendly mind set that would fit right in with our regulars and astute lurkers out there. My goal is to become educated first so as to avoid making expensive mistakes as you pointed out here: We don't like to hear or see people lose money because of the bad decisions they have made for themselves before discovering us. Additionally, I share your goal: Bottom line? I prefer to know exactly how something works and do it for myself. I enjoy the satisfaction in learning. Now, with all the valuable information you've provided on Covered Call resources, I can start digging in. It may take a while, but I hope to make a valuable contribution someday to another investor new to the Covered Call strategies. Finally, Yes, I do see the differences: Others, want someone else to do the thinking for them. They pay their money and expect results....For the majority, it may very well be the experience of eating with the family around the dinner table at home in order to share their stories and life experiences for that day. See the differences? :-) Thank you for your warm welcome and valuable investment resources. I'm looking forward to learning more. Have a great day! Skipperr

To: Herm who wrote (11213)	7/17/1999 8:08:00 PM
From: Herm	Read Replies (4) \| Respond to of 14162

FROM THE EMAIL QUESTIONS asked by George I thought this would be of interest to those of you that received the current free CCing newsletter from the folks at coveredcalls.com this month on reading the charts using the BB and RSI. THE QUESTION? Herm: informative post on BB and RSI. Your sample charts are 30 minute charts. How do you decide whether to use 30 minutes, 60 minutes or daily charts? For example, the RSI values and slope of curve are different for the 30 minutes and daily charts for Novell. Which chart should be used? I encountered this quandary with ANDW. The Daily chart gives me the signal that uptrend will continue. Tags upper BB band, RSI = 59.83 with positive slope. On the other hand the 30minute chart has BB narrowed and RSI slope negative, which suggest a downtrend. Firstly, is my interpretation correct? Appreciate your comments. Regards. MY ANSWER Good questions! I want to use the illustration of a pilot leaving LA bound for NY. The pilot might start out with a radar view of the entire US before setting out (weekly chart setting for RSI and BB). They want to make sure they have the right flight path for the conditions they will encounter while in the air ( CC or holding position with some target price range in mind). They check out the airplane for fuel, tires, engines, electrical systems, computers, etc. ( stock fundamentals, earning dates, split dates, insider buying or selling, short interest, open interest). Now, the plane leaves LA and is mid-way and they run another check of the NY landing zone for the latest updating conditions (switch to daily chart profiles). An announcement comes over the plane radio that a potential storm may be in the area when they arrive at NY (toggle between daily and 60 minute charts). The storm came from nowhere very suddenly. They have to pay closer attention just in case of an emergency (they may have to write CCs or cover CCs or buy to average down they may use 30 minute charts for last minute buy/sell timing). So, in summary. 1, Weekly profile - Beautiful double-bottom bounce in play as we speak! Both RSI and OBV are still moving upward along with the simple average within the upper and lower BB. Overhead resistance should start to kick in soon! Notice the upper and lower BBs are both slanted up and to the right slant. Meaning? There is no divergence. So, the move is well balanced and full of solid momentum. Gappers show up as BB divergence and they peter out faster than a solid up moving average with higher highs and higher lows. Stocastics is just starting to go negative. That is an early warning sign. No real danger yet. I give a prediction of a possible $25 top for this cycle. iqc.com 2. Daily Profile - Very nice upper and lower divergence and a gap upward in-line with weekly profile. Trend is still upward because closing price was above the upper BB. OBV is fantastic. Steady money flowing into ANDW. RSI still has room to move up before any action. Stocastics still positive and will give the first caution signal for this cycle run. Target price is above $23 for sure! Simple average still steep! Go baby go! iqc.com 3. 60-Min. Profile - I can tell that the break through $19.00 was the trigger for the gap! Now, when it comes time to write CCs or sell will show up fast in a 60-min. signal. The RSI is hardy working at this setting. It should peak out sooner or later. That will be your clue to take action! iqc.com The art of reading the charts is based on what side of the fence you are working. If you are setting up your CCers, then you need to calculate the price ranges and the pivot points within reason. If you are buying stock or calls you need to know the narrow BBs and divergence of the BBs to the up side. You have a smoker here! She's hot! George! The weekly setting shows more weeks out. I can tell you this. If I paid $26.00 ALL THE WAY BACK IN 1997 and this is the first chance in 1999 since 1997 to dump, I would dump. Wouldn't you????? So, you know what to do if you are a sharp shooting CC cowboy? Go deep and long with CCs with sideshow PUTs! Use your CCer's money for your insurance! If you need to unload, do so. Otherwise, nice looking stock! Now, if you wrote CCs at $19 and the stock gaps like it did. I would have immediately picked up sideshow calls to capture the upward appreciation. I don't like to cover at a lost. Also, since I tend to write more than two months out, I have a greater amount of time to work the stock and pay for the sideshows easier. The stock may cycle up and sideways and I still make money until they call me out! If you are short for say one month out you are cooked faster since you don't have the time working in your favor. I think there is much more risk from a CCers standpoint. We have the CC tool shed to repair any damage to our positions. Thanks for the great question.....