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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: Tony D. who wrote (6405)	1/14/1998 8:58:00 AM
From: Greg Higgins	Read Replies (1) \| Respond to of 14162

Tony D. writes: I ran a couple of charts on the Apr. 17.50 calls and puts for CREAF, on Wall Street City. In the middle of Nov., you could have: A. bought the put for less then a dollar, B. sold the call for 11-12 range. Creaf was in the $28 range. My impression is that no one would ever do this. If CREAF is at 28 you need insider information in order to be able to predict that the Apr 17.50 are a good sell at 11-12. Why? Because there is little time value to the option. If the stock is at 28, you get time value with the 25 and 30 strikes, not with the 17.50 strike. If the stock is at 28, you might buy a 17.50 put, but you're much more likely to choose 25 or 22.50, where you have some protection. When I sell calls, I like a stock to be near/at the stike price I'm selling, since then I get the maximum time value and the best $$/unit time for the option. I'll sell a higher strike if I don't like the in the money tradeoff and I think the stock isn't going to get to the higher strike any time soon.

To: Tony D. who wrote (6405)	1/14/1998 10:29:00 AM
From: Douglas Webb	Respond to of 14162

Doug, I like your new chart site, although I am still having some trouble deciding when to buy and sell. I ran CREAF, AND MDCO through and some of the buys were higher then the sells. I'm still having the same trouble! The charts are finally correct, thanks to some help from Dave Horne, who wrote a good description of Three Line Break charts on his website at geocities.com. I'm still working on the trading signals. I made a lot of progress last night, but it still needs fine tuning. So far I've put nearly 20 hours into this thing; it had better turn out to be useful! Doug.