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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: David Lind who wrote (11933)	11/28/1999 9:30:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Hi David, Welcome to the forum! I think I can answer your question with a fairly easy answer. We advocate the primarily use two major technical indicators. That is, Bollinger Bands (BBs) and the Relative Strength Indicator (RSI). You can pick a chart web site on the internet that allows three to five years worth of plotting along with the BBs. Look at it and where you see a wide distance between the upper and lower BBs, you are seeing the documented higher volatility points which was reflected in the higher premies for the PUTs or CALLs. Notice, I mentioned the two kinds of options because those high volatility periods could be durning an up or down price cycle. The rest of the time the stock price is within the norms. It is possible by looking at the stock to see how long in lenght of time the stock takes to move up or down or sideways. Again, it is only an estimate! But, it is better than guessing for sure. As far as cycles? Sure, just about everything moves in some kind of time cycle. From oil prices vs. airlines, trucking, transportation industry to interest rates vs. technology stocks, banks, brokerages, etc. You can plot all those industry groups and see the cycles they are in as well. Look at the toy stocks right now. You can buy LEAPs on TOY for $7 and write spreads for +$2.00. That's some nice ROI for a few months and capital appreciation if you are called out on top of that. TOY just completed the second leg to a double-bottom pattern and with a relatively low RSI and OBV starting to increase, you are looking at more upside potential from here. A divergence between the upper and lower BBs confirms that along with the Stocastics going positive. TOY NYSE: (TOY : $18 3/8) $5,218 million Market Cap at November 26, 1999 Ranks 133rd in the Fortune 500 on Revenue & 241st on Profit. Employs 70,000. Trades at a 23% Discount PE Multiple of 11.7 X, vs. the 15.1 X average multiple at which the Toys SubIndustry is priced. siliconinvestor.com Note! Overhead price resistance should kick in around $20. A no brainer for a quick profit! :-)