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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: Johndee who wrote (8279)	8/19/1998 8:15:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

CPQ As far as CPQ, Sept./Oct. is the start of the end of the year house cleaning. Funds will try to lock in profits by shorting against the box or dumping stocks if there is no long term potential. CPQ is one of those "short against the box" stocks. CREAF Crazy situation with CREAF. Asian Flu has hit this stock bigtime. Earnings was increased on 8/13/98 to $2.46. That is unreal profit! The company has a growth rate of 16.17% vs a P/E of 4.2. This must be a joke or a serious oversight by the big boys. It a steal at these levels. NASDAQ: (CREAF : $9 1/2) $832 million Market Cap at August 18, 1998 Trades at a 77% Discount PE Multiple of 4.2 X, vs. the 18.7 X average multiple at which the Retailers of Electronics & Computers SubIndustry is priced. TRO vs Short Interest Relationship? Here is something to consider from a technical standpoint. CREAF float Turnover Rate (TRO): 84.69 Days is quite large compared to most stocks. This is a slow moving stock because the number of shares being traded is quite small. Now, look at the short interest below. The number of short interest worth of trading days peak was 1.53 days (ratio). And indeed, the CREAF price took a dump starting in April. You can find the TRO off Doug's web site at webbindustries.com One might be able to conclude that the TRO for each stock is related to the amount of short interest. That is, 10 days of short interest for one stock may be enough to severly drop the price whereas another stock it would not be a big deal. Very interesting! Therefore, if we look at the short interest it would help to know the TRO in order to predict the drag down effect better. Month Shares Short Avg Daily Volume Ratio* Remark 07/98 646,298 728,890 0.89 06/98 540,819 1,074,407 0.50 05/98 528,595 820,163 0.64 04/98 818,640 533,772 1.53 <======= price drops 03/98 570,631 992,269 0.58 02/98 490,969 1,627,409 0.30 01/98 541,699 1,199,256 0.45 12/97 437,857 1,805,921 0.24 11/97 557,978 1,665,531 0.34 <====== price drops