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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: Shanstar who wrote (5932)	11/20/1997 7:25:00 PM
From: Douglas Webb	Read Replies (1) \| Respond to of 14162

I don't use Power Options, and I wouldn't use Power Options, because I wrote Power Options (or at least something extremely similar) and it's very dangerous for someone who doesn't know TA to use Power Options to select stocks, and nearly useless for someone who does. Basically, it's a Wade Cook style volatility ranker. It goes through the closing prices of every optionable stock, and calculates a return assuming you do a Buy-Write. As we all know, stocks with high Buy-Write returns are very volatile, usually for a very good reason. (An overheated stock of an overvalued company, for instance.) We also know that when you do a Buy-Write, you're either paying too much for the stock, or getting underpaid for the call. (If the Buy-Write has a high return, you're overpaying for the stock.) In other words, don't shell out your money for this, you'll eventually lose much more than the $20-$30/month subscription in a bad investment. You know, I've seen a number of sites which provide this exact service. They all want money for it; some are reasonably cheap, like this one, and some are outlandishly expensive, like good old Wade Cook. But not a single one ever gives a true history of their profitability. For a while I had my program assume a portfolio of $10,000, try to keep it fully invested based on potential returns and reasonable stop-loss points. It failed misarably. I couldn't find any set of rules which could pull a profit out of that list for more than a couple of months. Most of the time there were a bunch of small gains which got wiped out by a couple of huge losses. There's just no way to do it without doing FA to pick companies, and TA to pick buy and sell points. And, one of the first things I taught myself about FA is that if a company appears anywhere near the top of that list you probably don't want to own it. Doug.