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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: Senator949 who wrote (8141)	8/9/1998 12:26:00 AM
From: Herm	Read Replies (4) \| Respond to of 14162

Hi Robin, CPQ has met the W.I.N. CCing trading rules and should be cycling downward. 1. Upper BB tag 2. Increase of RSI above 60+ 3. Trading volume increase of 25% or more. 26 million vs. 13 million is a blowout. The analyst upgrade is already in the current price. The increase volume was MM fade! In other words, selling into the buying. RICH P/E NYSE: (CPQ : $34 7/16) $52,138 million Market Cap at August 7, 1998 Ranks 55th in the Fortune 500 on Revenue & 59th on Profit. Employs 18,865. Trades at a Premium PE Multiple of 67.5 X, vs. the 25.9 X average multiple at which the Computers SubIndustry is priced. SHORT INTEREST DECREASED From June 15 thru July 15 CPQ had one of the largest decreases in short interest from 78 million plus down to 40 million plus shares. So, that would account for the price increase for this cycle. The impact of short squeeze drove the CPQ price upwards. Now, with the kind of volume CPQ had on Friday, I would tend to believe our BB indicator and the RSI. Short interest is most likely building up again. Otherwise, the price for the stock would still be shooting up! Date Last Chg. % chg. hi low volume Aug 07 34 7/16 - 11/16 -1.96% 36 1/4 34 1/4 26,808,800 Fade Aug 06 33 7/8 +1 15/16 +6.07% 34 3/16 31 5/8 24,991,000 Peak Aug 05 31 15/16 - 1/8 -0.39% 32 5/16 31 15,658,700 Aug 04 32 1/16 - 13/16 -2.47% 33 11/16 32 18,813,000 Aug 03 32 13/16 - 0 .00% 33 7/16 32 1/8 11,486,200 Conclusion: CPQ is cycling downward. Write deep CCs, buy cheap PUTs and sit tight until it bottoms again. You are better off owing the CPQ LEAPs for a fraction of the stock itself! With the short interest reduction the upward move is over for now!