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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: tuck who wrote (11250)	7/20/1999 12:09:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

As I write, the EDFY 12.5s PUT are @ 1 3/4 which is a 3/8s gain in value over what you paid for them. PUTs are like deductibles on your car insurance. The higher the deductible (lower PUTs strike price) the cheaper the downstroke. I noticed that the 20-day volatility is at 71.7%. So, a delta of .45% of 71.7% is 32.27% net change for your PUT which comes out to approx. a fair value of 1.82 plus you add a spread for the MMs. Pretty close to the fair price Tuck. You do have a profit. The way to increase the hedge is to buy more PUTs than the number of CCs you are holding. That compensates for the lower deltas that you have to overcome! You have taught me something Tuck. I just learned how to calculate the potential price moves and the PUTs value from my data info at www.stocksmartpro. That is where I read the 20-day volatility value. Now, Tuck! A 3/8s gain in your PUTs is a .27% gain on your original 1 3/8s downstroke which came from your CCs, right? :-) You still have some good time remaining on the PUTs. It still sounds like cheap insurance to me. Just imagine if EDFY tanked big time? You would be dead. Remember risk vs. reward balance. SideShow PUTs Formula I was trying to come up with a formula to calculate the # of PUTs needed to cover 100% of loss value in your portfolio by a drop. I know I have seen it in my books. Does anyone have it?

To: tuck who wrote (11250)	7/22/1999 6:29:00 PM
From: Herm	Read Replies (3) \| Respond to of 14162

ITDS Bargain basement prices today! Hey Tuck! This is the kind of vipers that come along and can clip your wings. I'm betting the stock will rebound for a quick 2 bucks. The blip came on my screen and after a few background fundamentals checks and reading the charts I snatched up a chunk of shares for the technical bounce that is sure to come. This stock was oversold big time on panic selling. I hate to see people get killed. But, it should be some easy money this week. I would write covered calls at some point, but, the open interest is very low. The price now puts the P/E around 9.6 times earnings. That's a joke in the market today. NASDAQ: (ITDS : $10 1/8) $129 million Market Cap at July 22, 1999 Employs 200. Trades at a 67% Discount PE Multiple of 9.6 X, vs. the 29.2 X average multiple at which the Data Processing SubIndustry is priced.