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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: KB who wrote (8298)	8/20/1998 8:53:00 AM
From: Herm	Read Replies (3) \| Respond to of 14162

Hi KB, You missed the opportunity to CC when KM tagged the upper BB recently. To do so now would be riskier, but not deadly. Is KM overvalued? Hummm, it is a slow moving stock with a growth rate of only 12.62% vs. 18.2 P/E and a TRO of 168.75 days. I could not find out the short interest to know if KM is being slowed down by that. I did not notice any dividends payments. If I were in your shoes (provided your net cost basis is lower than the current price) write two months out ITM CC. Hold off with the PUTs since KM does not move so fast to provide big PUTs appreciation in a short time. From the BB top would have been better! If KM tags the lower BB you know what to do! Although, you might want to jump into the KM LEAPs. Say, 10 JAN00 @ 8 3/4s now and will be lower when KM hit the lower BB. The stock is selling around $17.00/share x 100 share = $1,700 for a full lot. Heck, you can own two year 2000 KM LEAPs for less than that and write twice as many CCs. Now, that will put premies in your pocket! NYSE: (KM : $17 5/8) (KMpT : $65) $8,600 million Market Cap at August 19, 1998 Ranks 20th in the Fortune 500 on Revenue & 332nd on Profit. Employs 275,000. Trades at a 32% Discount PE Multiple of 18.2 X, vs. the 26.6 X average multiple at which the Discount & Variety Stores SubIndustry is priced