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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: Dr. No who wrote (8132)	8/8/1998 12:19:00 AM
From: Herm	Respond to of 14162

Caught me by the short hairs! Short Interest shot up from June to July to 10 days worth. Plus, their merger companies lost a contact this pass week. Yet, TLAB did come close to the lower BB. Testing the recent 52-week high is most likely next followed by another plung if no positive news is announced.

To: Dr. No who wrote (8132)	8/8/1998 2:48:00 PM
From: Seyda	Respond to of 14162

Hi.. Dr.No, Herm, correct me if I am wrong, CC-WIN strategy is based on several plausible behavioral observations: 1. Short term behavior of people tends to indicate that investors find a short term price change excessive when the price of the stock exceed the boundaries of a price band that covers 95 percent of the most recent price move. Let's call this rarity assumption. (This assumption stems from the BB band being developed over two standard deviation of the moving average of recent price data.) 2. When investors feel that short-term price increase is a rarity, they take profits by selling (Price tags the upper band). At this point fear of loss wins. 3. When the investors feels that the short term price decline is a rarity, they consider the condition as a buying incentive. (Price tags the lower band) At this point opportunity smiles. 4. The behavior described above become more regular when the volume and the momentum is sufficient for the stock (RSI and short interest measure that) 5. The above four is based on the trading habits of average investor. Any unusual factor such as a piece of surprising information may affect the behavior, making BB and RSI misleading indicators. 6. The chart reading is an art more than a science. The interpretations may not be reliable in technical analysis, but probably improve with experience. One of the members, I cannot remember the handle now, indicated that TLAB was not a clear case, so, I guess we violated one of the items above. By the way, I do not have contribution to the formulation of WIN. The above is only my reading of the underlying assumptions. If they are correct, in order to become successful with the WIN, implementer, must familiarize himself with the general behavior of the price movements, must carefully follow the news and be sensitive to potential aberration in trading behavior. Of course it is all MHO. Best wishes Seyda