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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: JoAnn McCracken who wrote (5596)	10/23/1997 1:50:00 PM
From: Douglas Webb	Respond to of 14162

I keep missing opportunities by buying my calls back too soon. I've been sorely tempted to buy back my INVN and UGLY calls today, since they dropped a lot, and earnings reports are coming soon. I haven't done it, though. Look up HMTT on my site, and check the 'TA' and 'O' links. The TA chart is based on yesterday's close, so you'll have to guess how it'll look with today's prices. If memory serves, HMTT is still near the top band. Market correction or no, you don't want to buy back the calls until the price is at the lower band, RSI is under 30 and rising, and the stochiastics are giving you a buy signal (the two lines will be low and crossing or about to cross.) When you look at the option page, compare the time value to the ask price, and to the price you received when you wrote the call. If the time value is relatively high, you don't want to give it all back. It'll slowly decay to nothing, if you wait until expiration. You can also look at the delta, which will tell you how much the option price will change if the stock price changes by $1. If the delta's low, the option price didn't move much when the stock price fell, and it won't move much when the stock recovers. You can get a rough idea of where the option price will go for various possible stock movements. So, generally, without looking at any of this stuff, I would recommend waiting. So long as the stock price doesn't rise past the call's strike price by expiration, you'll be okay. A rushed buyback is only necessary if you expect a strong uptrend which will go past the strike and not come back. Doug.

To: JoAnn McCracken who wrote (5596)	10/23/1997 3:40:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Stay the course JoAnn! You have everything going for you at this time! HMTT RSI is still tapering off slowly like the last time it got up this high. There is more downside in the short run compared to upside to test this last high. The stock is moving sideways at best. So, minor time erosion is ticking away. In the absence of news, HMTT will continue to be tempted to pullback for some profit taking. You will not lose no matter what! Step out on the edge a little and sit back.