Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: jaytee who wrote (13420)	11/15/2000 11:31:44 AM
From: virgil vancleave	Read Replies (1) \| Respond to of 14162

jaytee: Sorry it took me a while to respond to your questions. I have been busy studying and trading the market. You are quite correct on my way of finding undervalued stocks. I check the covered calls site and also keep a list of stocks I know are cash rich and undervalued (hdd and nmgc for example). I then watch the way they trade to get entry and even exit points. If it has options, I will often sell calls, much like I did early in the year on muei. The stock went down $1.50 on me, but I made $8 in three months on the calls for a nice gain. Herm has some good strategy and info on how to do this. His methods and explanation are extremely valuable. The stocks I watch and trade I know very well, even to the extent of checking their products when possible. As far as charting, I use yahoo a lot. It is ok for big picture. I also use clearstation and my broker has some charting tools that i look at. As for valuation, I like yahoo, but it is not always up to date. From there I go to the quarterly earnings report or edgar to look at the financial data for both long term debt, cash and equivalents, shares outstanding, and sales. Lots of great data to do numbers on, which is easy for me since I have a bachelors in math. I am not always right either. As some know, I had a rough spot in late june and early july. imfx tanked on me. So did pssi. I decided neither was worth playing anymore since I must have missed something. Realized I was wrong and moved on. In them two weeks I lost 25%.... OUCH. But, I am now at 4 time where I was a year ago. I have made up the losses and then some. As you can tell discipline and not giving up are part of the equation here. For short ideas I follow the high fliyers and when their momentum changes, I will short if I feel it is overvalued. Take jnpr for example, which I shorted at 224. Price to sales very high and debt is high also. The growth and earnings just didn't support the price. Same with hgsi, although I got chicken and closed my trade with a small loss. Just a note of my newest short. I shorted oat this morning at 90 7/16. I have been waiting for over a week for it to go back above 90 to get it. It is extremely overvalued and has substantial debt. In fact, it has a debt to equity ratio of over 2, which considering the market cap is 11 billion, it is hurting. That coupled with a price to sales ratio of over 2 in an industry with low profit margins makes it an excellent short. If pepsi or any other company buys it, it would be a mistake much like when oat bought snapple a few years ago! Just my opinion. Hope I answered your questions jay. p.s. pdii is again approaching the short level. I will short it above 223, if it gets there.