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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 (8700)	9/27/1998 10:41:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

Hi Johndee, Regarding TECD and TNSI, I was under the impression that we would buy the cheap puts, which means way out-of-the money and close in to expiration. Cheap has always been my advice. Many times I have warned to get as much expiration time with PUTs as possible. A lot depends on the summation of the cost of the PUTs, the technical chart readings, the P/E and earning events! Sideshows are just that! I use CC premies to try to capture more profits from sideshow PUTs and CALLs. For example, I had a large kahuna with TLAB if you recall. That "seed money" came from my Jan. 7 1/2 CCs of $1,225. So, I would be willing to risk more here and there. That might mean buying more PUTs (10 contracts) or longer time spans (two or three months out). If I rack in a few thousand dollars then blowing $400 to $600 on sideshows is not out of line. Everyone must gauge what they can afford to lose! Risk vs. reward is a constant. I lost big time last month on a few companies, and it looks like I'm going to lose on TECD & TNSI this month. I'm sorry to hear that! Did you have any good hits? If not, you need to take a close look at your trades to determine why not! Many of the readers indicated successful trades with the discussed bear traps. It was just about a turkey shoot last month. Please! Don't rely solely on others to "do the thinking" and not do your own homework. It is critical that you learn to apply the concepts and feel confident that it works for you! Over the years, I have come to realize that you can develop a perfect strategy and teach 10 people that same strategy and guess what? You will get 10 different results ranging from the pits to better than me. For each of us, there are sometimes small variables in our personalities and a measure of luck sometimes. Example: 1. Do you concentrate when you place your buy/sell orders or do you second guess yourself and get nervous? Do you have easy access to begin the process? 2. Do you understand the bid/ask pricing process and how the MMs jerk the prices around all day? Do you watch the volume and determine if the stock is in play or being shorted. 3. Do you have any bad habits that are taking over the W.I.N.S. approach. Well, I guess we all have some of that to fight. Both are Oct o-t-m. I think I'll buy a-t-m from now on in most cases. If it starts to move in the opposite direction, hedge with the opposite option, or stop it out. I prefer the hedging. I'm talking about not owning the stock, so there is no CCs involved. My CCs and the rest of W.I.N.S. are okay and holding their own. Again, CCing when upper BB tags and using the CC as a hedge is a conservative approach to buy and hold stock ownership. Sideshows are more speculative if you are using the CC premies on other stocks rather than buying the cheap PUTs on the CC generating stock. Cheap PUTs on the CC workhorse should be the first priority. If TECD and TNSI breaks down this week and drops in price, hold the CCs another week. If TECD and TNSI defy gravity this week then consider liquidating what value remains! That is another reason why I like to trade 6 to 10 contracts at a time. More residue value to overcome the commission cost! Wishing you the "best of good buys" Johndee!