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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: Mike T. who wrote (11544)	9/18/1999 1:11:00 AM
From: Dan Duchardt	Read Replies (2) \| Respond to of 14162

Mike, I'm also following IFMX. I wrote Jan10s on half of my long position @ 11/16. At the time that gave me upside potential of a bit over 40% in 4+ months if exercised. I've been waiting for the best time to cover the other half, but still looking mostly for strikes of 10 with a good premium for October or November, January if I have to. I think you are right that the time is close to make the move. (I was sorry to see IFMX pull back a little today after breaking the 8_3/4 high of 3 days ago. I had visions of a 10% day once that top was broken. Hopefully it has at least one more good day of up before we see a down day. Even a nice gap up before pulling back would be welcome.) I'm curious about your inclination to sell the Oct 7_1/2s. I'm pretty new at this, but I see little upside potential in the 7_1/2s. I'm not suggesting that I know better than you what you should do, but I'd like to hear what's wrong with my thinking before I make my play. Let's assume you can get that 1_1/2 premium with the stock at 8_3/4. You more or less lock in, but also limit your upside from where you stand then to 1/4 (Break even is at 9; after that the call buyer is making all the money) and you have to wait a month to get it with no possibility of additional gain. I don't see the advantage this has over selling the stock and buying it back if it does retreat, and then writing the calls. If it's because that would be outside the parameters of a consistent CC strategy, I can certainly accept that, but I can't make the numbers tell me selling calls that deep in the money (with over 80% of the premium being intrinsic value) will give the best return. It almost looks like you are expecting the stock to retreat to around 7_1/2 or lower before Oct expiration. If I believed that, I'd sell the stock now and use the money for something else until the bottom came. Being on the sidelines gives greater flexibility to re-enter on a dip below 7 _1/2 if it comes. Sure, there is danger I might miss it, but no more danger than your being called out. TIA to anyone who cares to respond. Dan

To: Mike T. who wrote (11544)	9/18/1999 5:37:00 PM
From: Herm	Respond to of 14162

As you say Mike, IFMX is packing some volume this past week. Looks like $10 will be the nut to crack for IFMX. Plenty of folks out there waiting to dump at the first sign of $10. Hey, this stock has cranked out some CC premies and it sells of the cheapest LEAPs out there. Those LEAP/call calendar spreads are really sweet. ORCL disappointment put a damper on IMFX for a while. The street may be thinking different now. Perhaps IFMX is gaining some ground. ORCL is hurt more by Japan sales which must be leveling off lately with the weak Yen. IFMX has other things in the fire with US deals. Hardly, a day passes that IFMX does not have good news. Earning is out next month! Overhead resistance at $10.00. In the meantime, ROST held at $40. This stock did about the same thing during the last split. Went from $42 to $38 before the split, split at $22, and then went to $28 post split in about three weeks. That would be enough to get me back into the money. The OCT 40s Calls is the strike to buy this week.