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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: drsvelte who wrote (6037)	12/6/1997 7:26:00 PM
From: newbie	Read Replies (1) \| Respond to of 14162

Hi how do you go about finding the ones you think or overvalued thanks paul

To: drsvelte who wrote (6037)	12/6/1997 10:58:00 PM
From: Greg Higgins	Read Replies (1) \| Respond to of 14162

drsvelte writes: How do you search for good CC candidates that meet your ROI criterion?? I stumbled over Citicorp because I was looking at Value Line stocks whose price was greater than $100. I was less than scientifically examining the hypothesis that stocks with high prices are good potential CC candidates. It's not a valid hypothesis, but it served to winnow a universe to a managable collection of stocks to look at. Last week I bought HP (not HWP), for 73 and change and sold Jun 75 calls for 10 (10 + 1)/37 * 12/6 * 100 = 59, with some downside protection to 64 a price the stock hasn't seen since August. Now I've been wanting to get into the Oil Services industry for some time, but valuations have been way too high. To find it I noticed that the oil services industry had been taking a beating recently, I got a copy of the value line stocks in that industry an examined them one by one using cboe.pcquote.com to get the option values, and using my charting software to look at their historical pricing. Note that there are a number of charting services on the net which will do just as well. I look at a 300 day chart, and for the higher priced stocks a weekly and monthly chart going back years. Notice that like CCI, HP is a generally decent stock at or near a four month low. Just replace the HP by the ticker symbol of your favorite stock or the ticker symbols of stocks you want to evaluate. So, to answer your question, I get ideas for stocks or industries from the news, from services lik evalue line. Then I check each one for safety, return and repeatability (which I haven't yet figured out how to measure or guesstimate). I ask myself if I want to own the company. I will look at fundamentals. I think the phrase "good stock, but temporarily out of favor" is a positive. If I'm watching CNBC or such and hear a phrase like that, I check it out. I may not always have cash, but it goes on the list of things to keep an eye on.