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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: Rob Hodges who wrote (7823)	7/5/1998 6:31:00 PM
From: Herm	Respond to of 14162

Hi Rob, RADAF has been one fast climber over the past year. I can understand why the funds were quick to pull some money off the table with the slightest indication of a flat quarter. The big money have some large profits at stake with RADAF. Take a look at the RSI and BBs. RSI has dropped and is going sideways since mid-June. bigcharts.com &time=8&freq=1&compidx=&comp=&ma=2&maval=50&uf=8&lf=2&type=128&style=3 &size=3&country=us You picked up a good premie on your last round of CCs. With such a high price I would have picked up some real cheap PUTs before that earnings report. That is the only thing I see you should have considered. Now, as far as a recovery spread? Only when RADAF is ready to climb again should that be attempted. Month Shares Short Avg Daily Volume Ratio* Remark 1 RADAF Radica Games Limited 06/98 1,432,784 244,988 5.85 05/98 1,415,635 125,099 11.32 04/98 1,316,313 319,761 4.12 03/98 1,246,523 348,792 3.57 02/98 979,305 326,107 3.00 01/98 363,099 302,622 1.20 12/97 32,646 198,077 0.16 11/97 33,157 213,285 0.16 10/97 30,260 279,344 0.11 * Ratio = Shares Short / Avg Daily Volume; it may be used as a rough measure of days to cover. The short interest has been picking up. I would expect flat to lower prices for a while. Low volume and the shorts will start to beat down he stock. Fair value for RADAF? EPS is set at $1.36 x 16.4 avg. P/E in that group means a fair value of $22.30. This company is in Hong Kong and no telling what is going on there. The current price of $17 brings RADAF down to about a P/E of 8.5 which is radiculously low. I really wondering WHY DID the company announce a stock buy-back of 1 million shares in Dec. 1997? Was the 52-week high of $22.25 caused by the company backing back their own stock or what?