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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: NateC who wrote (13660)	3/16/2001 6:46:28 AM
From: jaytee	Read Replies (3) \| Respond to of 14162

Hey, Nate: Yeah, it IS quiet. I'm like your idea of picking up a leap , and selling a call so close to the "midnight hour". Did you mean that you bought the Jan 03 30's? Because the 5.00 premium looks to have been the cost for the 30's yesterday, whereas the 20's sold for as high as 9.00 ea yesterday and only as low as 7 3/4. I must be missing something. Did you really sell the 20's calls? The stock opened 21 7/16 yesterday, and closed 20 5/16. That's guts! How do you feel about selling the 20's when you're already RIGHT THERE? Maybe I misunderstood. If you sold the 22.5's THEY sold for about 3/8, and MIGHT be less likely to call you out on the last day (than the 20's, with the underlying itself already over 20 1/4 at the end of the day) I was just wondering if I missed something, because the lowest that the 20 calls sold for was 11/16 (not 3/8) . So maybe it was a typo. In any event, if you sold the 20's, and the stock is ALREADY selling at 20 PLUS (the day before expiration), how do you play this? Meaning, how HIGH can the underlying go till you feel comfortable with NOT being called out? Are you playig a calculated risk on the stock further tanking? And are ready on the final day to pull the trigger if you are wrong? Do you know something that you can SHARE about your broker's policy on (how close the underlying has to be to the strike price you sold before they're) calling you out? And, if you're betting on it tanking further (today) on the last trading day before (Sat.) expiration . . . do you sit by your monitor for the day to watch? (waiting to buy it back) If you have to buy it back, can you usually do so on the LAST day for a significantly LOWER price (as time value leaks out like the sands in an hour glass) . . . pocketing the difference . . . and still make enough to outweight the COMMISSIONS? just trying to learn from you guys in the trenches any illumination would be appreciated! jaytee

To: NateC who wrote (13660)	3/23/2001 1:31:54 PM
From: Herm	Read Replies (2) \| Respond to of 14162

Hello Nate, Virgil, and fellow lurkers. It has been a tad bit quiet on this forum. It takes a considerable amount of time to keep the board active. I have been quite busy over the last few weeks on the some major projects. We moved to a much larger web site with all the heavy software database capabilities. That included an automated password manager with timed email messages capabilites. That will free up a great deal of time. Also, it was the only way to automate the free trial subcribers offer. 1. The emails keep rolling in from folks beaten down over the last few months. So, personally I have been trying to help those folks (they are not even my subscribers) as best I can. The usual stuff of chart reading and getting the background bottom line nut. I will list the one that really got my attention at the end of this message. 2. We picked up a new data feed provider for our web site with vast range of information each our daily feeds. We will soon have in addition to the free DOW LEAPs spreads reports and subscriber's LEAPs Spreads, the ability to create charts from the historical data, (TRO) float turnover analysis in a table format, large/small block trades, and the ability to calculate the PEG ratio. So, finding data vendors and comparing the features against the cost has taken time. Plus putting out bids for programmers has been another task. I simply have to pay programmers that have this kind of specialized background. 3. Getting our my column in Shane's newsletter was another job to add to my monthly list. Shane did an excellent job in the March issue of his free newsletter (http://www.coveredcalls.com). These are the sites he found. StockSelector.com's "Quick Screen" stockselector.com StockSelector.com's old "Advanced Screen" old.stockselector.com Basically, I'm putting together several databases on my web site that will have the capacity to provide these tools as tables. Most will be free to the public and the more detailed educational modules materials and email support is on a subscriber basis. Today, was the first day in a week that we were able to produce the reports. We are going back to provide the ones we missed. It seems to be working ok. Here is that email that speaks for a great many folks out there. I offer it to read since there is always something we all can learn from other people's mistakes. That is how I started this forum. I continued to record and keep records of what people did that made them money and what they did that caused them much harm. The crazy part is that most of us all make the same mistakes. And, it is possible to avoid those expensive lessons if you just take the time to learn about them. Herm, Thanks for the reply. You are absolutely right, I waited much too long before doing anything. For a little background. A good friend of mine told me about his "stock picker" and how much money he had made on RMBS. I checked into it and paid for a subscription. The next time he came out with a buy recommendation on RMBS leaps I jumped in with $50K. This turned into $250K in about 4 months. I thought this guy was a raving genius. After this is when greed and stupidity set in. My timing on the sale was excellent and I netted the $250K. The next time the "stock picker" recommended more RMBS leaps I jumped in with the $250K thinking I would turn this into a million. Then he recommended some jan03 leaps so I bought a $100K worth. Now I have $150K of my own money into the leaps thinking this stock will go to $500 per share like the "stock picker" says. I even get some friends and relatives to jump on the bandwagon. The sad thing is that I am not a rookie. I have been investing in stocks for over 15 years. About 5 years ago, I starting using William O'Neil's loss cut strategy and I exited whenever the stock dropped 8% below my basis. For options, I was exiting at a 20% drop. I ignored these rules in the case of RMBS because I listened to this stockpicker who is still high on RMBS. This was the most expensive lesson in my life. Fortunately, I wasn't stupid enough to put all of my money in RMBS leaps. The road back will be long and I will be more cautious and follow my own rules. I haven't lost sleep over this and it hasn't affected my health because I do have significant other assets and a substantial salary, but feeling totally stupid is not easy for me to deal with. At this point the RMBS leaps are so beaten down there isn't much more to lose. I will watch the charts and technicals and exit the 02 leaps by late summer at the latest. I still have some time on the 03 leaps, but I don't have any illusions of recouping my investment. I actually did sell some options against these leaps to reduce my basis over the last 9 months. I have made a few other leap spread trades without a lot of success because I was on the long side of things. I haven't done anything for the last couple of months because I am in shock. My portfolio is down 30% overall from a year ago with the RMBS fiasco contributing to a good part of this. Well, I am rambling now and you aren't a therapist so I will close. I have learned a lot from your modules and I appreciate your response. I truly believe I have learned my lesson and will be much more cautious, follow my own rules and avoid stockpickers in the future. Take care and God Bless, Mark