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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: Shell R. Poust who wrote (11333)	8/3/1999 9:15:00 AM
From: Herm	Read Replies (2) \| Respond to of 14162

IFMX - Nearing Reversal Point This stock continues to follow the WINs game plan fairly well. I loaded up on CCs for the JAN 10s a few weeks ago and grabbed a very nice pot. It looks like I may be able to cover CCs around the 5/8s level at this pace. That would be about 75% of the original premie. The reason for the covering of the CCs has to do with the fact that the stock has more upside potential at that point and the remaining time value in the CCs is not worth waiting around until JAN for 5/8s when I could potentially do two more rounds of CCs at higher payouts. My timing for this round of CCs was such that the premies have protected just about 95% of the stock price pull-back during this downward cycle. In short, it is like locking in your original capital appreciation in the stock price without having to sell it and trigger a taxable event by the sale of the stock. Note - Sideshows with in the money PUTs would have panned out nicely to add additional profit for this cycle. I am convinced that you are better off doing ITM PUTs a few months out to avoid getting caught short on time. I will eventually cover at a point when I notice a solid tag of the lower BB and the trading volume increases beyond normal by say 100%. It may not be the rock bottom price before the reversal, but, pretty close. The fundamentals remain the same and I'm still long on IFMX. I will pick up another IFMX 100 shares to bring my total up to 800 shares. That will bring in another 100 to CC with. I just keep on repeating the process until I generally get 1,000 shares and enough time to bump into a long term capital gain. A year worth of CCs is about 5 to 8 rounds of CC income on top of the capital appreciation. So, to rack in 40% to 60% ROI annually (or more) unmargined is not impossible folks. And, I don't EVER lose sleep! It's money in the bank. :-) iqc.com We have a IFMX chart that showing a closing of the upper and lower BBs and a downward simple average curve. Trend continues to be downward. The Stocastics is starting to crossover into positive. That is an early warning. RSI is the low range for reversal. Another indicator. OBV is leveling off and neutral. Money is starting to level off from a selling mode. Another early sign. Price support is at a solid $6.50 to $7.00 and without any negative news it is a sure thing normal reversal. NASDAQ: (IFMX : $7 1/8) $1,081 million Market Cap at August 2, 1999 Trades at a 55% Discount PE Multiple of 19.3 X, vs. the 42.9 X average multiple at which the Software & Services SubIndustry is priced.