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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: Herm who wrote (7366)	4/28/1998 5:58:00 PM
From: Andrew Williams	Read Replies (1) \| Respond to of 14162

OK Herm, I have bought into XRAY with the intent of covered calling. My outlook has changed from a couple of years ago for a couple of reasons. After reading the 10K and the analysts reports it appears that they have really got the new product and acquisition pipeline going which will generate most growth. Also, John Miles, the CEO is usually really conservative when talking to the public, and he has been pretty optimistic recently. Now I have take a closer look at the which calls to write. OFF TOPIC. Another really small player in this industry is Young Dental (YDNT). Recently gone public and started buying other dental equipment companies. Management consist of some old XRAY management. Could be an XRAY target if the CEO George Richmond ever decides to cash out(he owns 49%). Sorry, too small for options.

To: Herm who wrote (7366)	4/28/1998 6:38:00 PM
From: FruJu	Read Replies (1) \| Respond to of 14162

>What is your net cost basis (nut) at this point? Well, bought at 12.5 (so that's my current NUT), and sold the calls at 1 3/4. >Plug in the two values to see your worse case scenerio. Is this the options calculation spreadsheet you're referring to? I keep seeing refs to that, but don't know where to download it from. The volume in the May 10s is very light, which may make it difficult rolling down. What do you do in this situation? Do you cover and sell the new covered calls immediately at market? I'm always scared of buying back the calls, and then trying to milk the last 1/16 out against the limit, and (on low volume) not filling, and then having the stock drop 1/2 the next morning... do you generally put in at market orders? Just looking at quotes today, VVQEV finished at 3/4, had intra-day low of 1/2. If it drops to under 1/2 tomorrow again, I will cover, and then sell either the May or June 10s (my assumption is that stock will likely drift down to or below 10, so I may even end up having these expire worthless). May 10s closed at 1 13/16 (volume 70), June 10s at 2 5/16 (volume 79). (Of course, last time I rolled down to protect against downside was in Apple in Jan/Feb, rolled down to Apr 15s from Apr 17.5s, at which point stock exploded upwards to 27, so I wouldn't be surprised if I act as the contrarian indicator again :)) E>

To: Herm who wrote (7366)	4/28/1998 8:10:00 PM
From: rkf	Read Replies (1) \| Respond to of 14162

Herm, here's an open-ended one for you. I cashed out of my ASND position today at $42. Any recommendations? - looking for a fairly conservative CC candidate. XRAY looks decent - has Doug run his magic on this stock yet. Kent

To: Herm who wrote (7366)	4/29/1998 1:11:00 PM
From: FruJu	Read Replies (1) \| Respond to of 14162

Hi Herm Well, surprisingly, for once, everything went according to plan! ;) I bought back the May 12.5s at 3/8, then VVUS had a nice little 1/4 pt uptick to let me sell the Jun 10s at 2 1/8. Based on my previous sale of the May 12.5s at 1 3/4, this gives me 1 3/4 - 3/8 +2 1/8 ------ 3 1/2 protection from my initial purchase at 12 1/2, i.e. my NUT is now 9 (actually 9 1/4 after commissions), and I'm short the June 10s. If I'm lucky, VVUS will drift between 9 and 11 over the next two months, and I'll have these expire, or perhaps, I'll think about buying June 12.5 up calls if it looks like the FDA announcement will give it a quick pop. Evan - feeling able to sleep a little more safely now.