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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: jaytee who wrote (11522)	9/16/1999 8:20:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

Hello Again! FROM THE W.I.N.s EMAIL Cliff who has be CCing for 2 1/2 years emailed me some questions that I would like to share with you all. Since, this is a learning and sharing forum with a vast range of investors. From novices to some heavy hitting astute pros. I never discount anyone's point of view or methods. For all I know, they will become the next George Soros of investing. I have been lurking on SI for about two months. I am studying W.I.N.S rules, CoveredCalls Newsletter's and doing my homework on learning to read BB and RSI. I like to use the term W.I.N.s. approach rather than rules to avoid inflexible adjustments mindset. As a case study, the tweeking process is ongoing every once and a while. But, you know what mean. Rules is ok, I guess. :-) I got McMillan's book today - still a lot to learn. I have been CCing about two years (traditional way) with advise from a friend who has been CCing about twenty yrs. I have a number of open positions - some okay, some I'm trying to repair using W.I.N.S. - I'll get to those another time. CCing is a old established trading method. And,I must say we have added several twist in order to reduce the risk and increase the profit potential of CCing. I am anxious (Dangerous!) to open a new position and ready to put W.I.N.S. to work. After your post today (#11521) on Ross Stores, I'm ready to make my play - buy stock and then "leg-into CC", but there are a couple of things I would appreciate clarification on first. 1) Is now the right time to get in given Greenspan's upcoming meeting next month? I would agree that we should always be aware of the overall market conditions and potential influences. Also, keep in mind that when EVERYBODY is convinced of one outcome, the markets do the opposite. So, that concern you have is already being priced into the markets this month. All you hear is doom and gloom! Heck, that's when you step up to the plate with your game plan. Notice, I said game plan. If condition one happens, I do this. If/when condition 2 happens, I do that. In other words, an informed thinking investor. ROST has been holding up fairly well this week. The decline is already built into ROST and it is just about at rock bottom at the lower price support level. Without a change in the fundamentals, ROST will be successful in the 2-1 split. A P/E of 12 is very low in the markets today. This is a conservative stock to CC Cliff. Not like those viper technology stocks. You really have to be on your toes CCing those suckers. Do I do technology stocks. Yes, but in moderation and I don't over expose myself trying to make a killing. And, forget about margin in those technology stocks. That is plain greed. 2) You use the terms "long" and "short" a lot. I take "long" to mean when you own the stock at less than the current selling price (have a profit) and "short" as the opposite. In your post today you said you were "long on the 45s OCT Calls". I don't understand "long" here as stock is selling at 41+. With you $1 Calls + $45 = $46 how can you be "long"? Is my definition of "long" wrong? I understand what you are saying Cliff. Good observation that I should not have assumed the readers would know what was on my mind. Long and short seems to be more of a street language rather than an official term found in books. When I say I'm long, I mean that I'm holding the investment with the hopes of the investment going up in value in order for me to realize a profit. When I'm short, I mean that I'm holding the investment with the hopes of the investment going down in price in order for me to realize a profit. It has more to do with the (thought out) intended outcome of my position(s). 3) I looked at buying OCT 40 call today but it was about 3 3/8. Why would I want to buy Call when I can buy stock @41+? Great question Cliff. You used the term "leg into" before. That is what I'm doing in my case. I don't wish to/can't commit all the money into ROST. For one thing, I need time to liquidate other positions in my portfolio in order to raise the money for ROST. That is, if and when I decide to commit before October. Down the road, I could just sell the ROST straight calls for a profit or loss as time will tell. I'm legging into the position using the long sideshow calls in order to avoid moving too fast on the liquidation of shares other my stock(s) before the right time! Consider this! My 45s OCTs @ 1 sold for about 3/4. I could now average down some more to reduce my ROST nut. If I owned the stock, it would take more money to get into position! I have done this before using the calls first. It reduces my exposure to a loss and many times I'm able to make the purchases using the CC premies dollars and no margin. It is a very conservative approach. I hope to someday know enough about Calls/Puts to be a contributor to the thread, but for now I'm just learning. Many thanks for such an informative thread, I know you must put a lot of time into it. I will be interested in your CD when available. When thanks Cliff. It is your interaction that makes it work for all. I learn a great deal from people. Then in turn, I try to summarize the knowledge and spread it over the forum. Every time someone is successful they provide feedback which feeds on itself. I only facilitate that whole process which is time consuming. I'm hoping the CD will bring in some profit potential which I will use to do other case study examples. Thanks for the questions. I will use them today on the forum since other should read it.