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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 L. Hoevener who wrote (12270)	1/27/2000 2:09:00 PM
From: Jeff Meek	Read Replies (1) \| Respond to of 14162

AMTD may not be a bad CC candidate. The stock is quite volatile, so the call premies are good. AMTD is currently consolidating above 16, where it previously found support in 9/99 and 10/99. 16 was also its foundation prior to the runup in early 1999. So if you pick up the stock now for 17, you have some choices for your calls. You could sell the 01/20 LEAPS right now for 5 1/4. This returns 30% of your money right now, with a total profit of 48% if you are called in Jan 01 (all unmargined). This puts your nut at 11.75. If you do believe that AMTD is at a base, then you could also wait a few weeks for it to recover to the 20-25 area, then sell the 25 calls for 7-ish. In return for being exposed waiting for the rise to 25, you are rewarded with a potential 88% profit if called out at 25 in Jan01. Nut is 10 in this case. This would be a great "fire and forget" trade for someone who doesn't want to monitor the market frequently. Of course, the reason you get these nice potential returns is because you're betting on Stewart, the multi-hair-colored freak who photocopies his butt at the office and gives his boss trading advice. Ye'old risk-reward factors at work again.