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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: Herm who wrote (8466)	9/2/1998 1:00:00 PM
From: CCWriter	Read Replies (1) \| Respond to of 14162

Herm, You say: >1. W - When the price is peaking (price touches upper BB and high >RSI) and on the verge of (W)ITHDRAWING: >a. Sell CCs at or in the money! (Bread and Butter) >b. Buy cheap PUTs and/or short the stock! (sideshow) >c. Cash in long calls! (sideshow) Wouldn't it be appropriate to add sell the stock. This is the perfect time to get out of the stock if you want to move on to some other company or if you wish to play the "buy low - sell high strategy". CCWriter

To: Herm who wrote (8466)	10/30/1998 1:54:00 PM
From: yaumi	Read Replies (1) \| Respond to of 14162

Hi Herm, I've been trying to understand recovery spreads to see if I can get my head back above water on some of these that have gone the wrong way. In message #8466 you wrote: " Recovery spreads involve the act of selling higher strike prices for the premie $ dollars. The premie dollars are used to buy deep in the money sideshow calls on the same stock as the CCs. So, the premie dollars offset the majority of the cost of the sideshow calls. The net result (if the stock moves up as expected) is a lower breakeven point (because of the increased value of the sideshow calls) and a higher strike price for the CCs (if exercised). When combined it will get you out of the hole faster and with little or no additional dollars out of your pocket." I've been trying to understand this in relation to SBUX. I have 200 shares at $55.56, currently at $43.18 moving up good today and at the top of the BB. Do I have enough shares to even think about this?? Would I sell the JAN 55 call at 5/8 and buy Jan 40 at 6?? That is how I understand the above quote. Or, since the top BB is in range, should I forget the recovery spread above and sell calls and buy puts (W) Once again, your help is much appreciated. Yaumi