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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: the options strategist who wrote (8758)	10/6/1998 5:36:00 PM
From: Herm	Read Replies (3) \| Respond to of 14162

Well Jen, You ask a good question. Before I get into my car and drive a long trip I check my oil, gas, and tires. Well, when I get ready to jump on a stock I check out the F.T.P! And, I don't mean the oil additive! :-) F.T.P. QUESTIONS FOR STOCK SELECTION WHAT ARE THE [F]UNDMENTALS? Wow! FORE looks real cheap and a good CC work horse. FORE has a growth rate of 31% and the very low P/E of 18.8 vs. 31.2 for the industry! Plenty of upside potential in this stock. FORE is beating earnings expectations the last two quarters. NASDAQ: (FORE : $10 5/16) $1,015 million Market Cap at October 6, 1998 Trades at a 40% Discount PE Multiple of 18.8 X, vs. the 31.2 X average multiple at which the Networking SubIndustry is priced WHAT ARE THE [T]ECHNICAL INDICATORS? Hummmm? The price is at rock bottom for the past year and just made a 52-week low today at $10+. The lower BB has been tagged and dragged way down. The RSI is bottomed out. FORE should rebound just from a technical standpoint as all the shorts cover to lock in profits. askresearch.com The short interest has been reduced and will allow FORE to float to the top again! 09/98 2,756,915 2,986,196 0.92 08/98 2,686,576 1,794,721 1.50 07/98 3,611,405 2,351,153 1.54 06/98 2,859,590 2,151,626 1.33 05/98 2,604,760 3,289,836 0.79 04/98 2,904,996 2,279,131 1.27 WHAT IS THE BEST [P]RICING STRATEGY? I would think from looking at the chart that FORE is going to rebound upward and then stall and test the bottom again! That means a 3 point increase and then down again before a major reversal. It is early in the FORE recovery. I like the FORE LEAPs rather than owning the stock! Check out the FORE CALL 10JAN00 LEAP @ 3 3/4 [LFYAB]. That will give you until the year 2000 to unload or exercise. If you buy a load of FORE LEAPs then you can wait for a little upward bounce and write a spread (CCs) against the FORE LEAPs. So, you are basically CCing the LEAPs. The FORE CALLs for the 15JAN @ 1 now should go for 1 1/2 if FORE moves up. 1 1/2 for the CCs for a 3 3/4 LEAP is a heck of a CC. Wow, I love it! Even $1 right now is gravy! You may be able to do three round trips before unloading the LEAP at a higher price. You net cost on the FORE LEAP would be 10 strike + 3 3/4 premie for 13 3/4. I can't imagine FORE going any lower in price! I am putting FORE on my buy list! Plenty of open interest in the options and the stock is cheap enough to short if needed down the road.