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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: Terry Maynard who wrote (7717)	6/20/1998 1:55:00 PM
From: Herm	Respond to of 14162

Alright Terry, My leaning towards a recovery spread is a result of my experience with many stocks turning on me when I covered and rolled up. I figure if I can execute the spread with little or no new money out of my pocket, I'm ahead of the game. Further, if I have to close out the spread (if and when the stock starts moving south) I can eventually cover my original CC as well. I would venture to say you can maintain better control of the price appreciation or depreciation. The indecisiveness of not knowing what to do and when is what will blow the opportunities.

To: Terry Maynard who wrote (7717)	6/23/1998 6:45:00 PM
From: Herm	Read Replies (2) \| Respond to of 14162

Terry and CC Gang! A few more emails this week prompted me to take the time to repeat and explain the application of the BB and RSI as a timing tool to better pinpoint pivots in a stock. I'm using BTGC since I own it at this time! So, this is a real case since it is my money! TIME YOUR CCs: I'm currently long on BTGC myself and in the meantime I have been selling covered calls (CCing) for easy income. Basically, BTGC made a new 52-week low today and should reverse it's direction from here. Some of the tools we use for CCing to predict the exact pivot points in a stock are the Bollinger Bands (BB) and the Relative Strength Indicator (RSI). We buy PUTs and sometimes our CALLs (as a sideshow) to sweeten the $ juice. Of course, we always use our call buyer's premie money to buy the juice. :-) bigcharts.com BACKGROUND INFOR: I own 700 shares of BTGC and I have been waiting to average down and eventually CC the additional shares. BTGC volume has been very week for two weeks straight and basically no block trades were recorded. That is telling me that no news and no money means lower prices as the stock drops from it's own weight! WATCH FOR THE SIGNS: The last three days several block trades were recorded and the prices continued to drop. Hummm, something is going on and I speculated that the bottom was near. In fact, today BTGC made a 52-week low on no news in the morning. I said to myself, "this is a fake out" since the BTGC volume was above average volume (440,500) by 1:00 AM and the stock price was down by as much as 1/4 in the morning. The price then quickly shifted into the positive by +5/16 by 2:00 pm and the block trades rolled in. The earnings have been up and never missed their numbers. Still, the stock is undervalued by 40%! Anytime you see an increase in volume by 10% or better you have a pivot reversal in price. Today, that rule was met and you can clearly notice the RSI and BB in the chart. THE TECHNICAL CHART: You can see that the RSI reading of 28 is an extreme low reading for BTGC and every single time the stock bounces up. Notice the BB indicator shows the price of the stock pegged to the lower Bollinger Band. Those two factors signal a pivot reversal. BTGC should rise until the $9.00 range from the current $7 plus before the overhead resistance sets in. Why? Those who paid $9.00 will think about getting out to break even. That will briefly depress the stock. Earnings release is due July 13, 1998 and no pre-announcements means at least a positive earnings. It is important to earn premie dollars while any stock is cycling up and down? CCing can cushion your drops and provide the dollars for PUTs to earn nice money as the stock drops.