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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: Cesare J Marini who wrote (7726)	6/22/1998 4:23:00 PM
From: Herm	Respond to of 14162

Welcome Joe to the forum, The question seems to be asked, "do I cover, or ride the upward price gap?" What is important to ascertain quickly is the cause for a gap! Possibilities: momentum traders (check the block trades volume and/or options open interest), short squeeze (lookup days to trade covering), news event (check out the news), rumors (check for leaks), insider buying (lookup SEC filings). And, do check out the charts. The ideal answer is as soon as you pinpoint the above mentioned causes. If there is proof of one or more of the above, then you would be wise to exploit the situation to protect your runaway CC and capital appreciation loss. Move into the recovery spread and get ready to pull the plug (if necessary) and take your money off the table. Reversal comes? Load up on those cheap PUTs! Ride it up and down. Temporary run? Hey, there are some stocks that go crazy for no reasons. Most are predictable if you monitor the charts. CCers keep a close eye on their stocks. Reading the charts is the key for your stock daily for the RSI, BBands and the volume. Remember, "Volume precedes price changes!"