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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 (8875)	10/23/1998 8:52:00 AM
From: Herm	Read Replies (2) \| Respond to of 14162

Howdy Johndee, PZN - ROOMS FOR RENT? PZN is in the prison security business. There sure appears to be a shortage of new prisons from what you read. Anytime you let out prisoners before the end of their sentence(s)because you have a full house, you have to wonder where our society is heading. That is, what are the reasons for such depressing realities. Forget Bosnia! The war should be forth right here in our very own country. Let's Check Out the S.T.P! The [S]ituation is that PZN has a very low P/E for an annual growth rate of 22.5% (can you believe that?) which is fairly large! PZN is undervalued bigtime! PZN even pays a $1.70 annual dividend which amounts to a kahuna 7% yield! WOW! You don't see too many of those kinds of payouts in the stock market. CCing PZN may add additional regular income on top of the div. and capital appreciation. You should be able to crank out an easy 50% to 60% rate of return or more per year with PZN! I'm a little concern with the low options open interest. It could be a problem at certain strike prices from time to time. Especially, if you plan to short PZN from time to time using PUTs as your sideshow. NYSE: (PZN : $24 5/16) (PZNpA : $21 1/16) $525 million Market Cap at October 22, 1998 Trades at a 36% Discount PE Multiple of 10.9 X, vs. the 17.2 X average multiple at which the Security SubIndustry is priced. The [T]echnical charts indicates a recent bottom in Oct. of $15.50 and then the major corrective bounce. PZN traded at $24+ last and the overhead resistance looks like $30 before profit taking and perhaps a retesting of the bottom. RSI is building and has a more potential. Notice the RSI in PZN is has been much higher than other stocks we have reviewed. There must have been a massive short interest in PZN. askresearch.com The PZN [P]rice should continue to climb towards that $30. Keep an eye on the volume which averages around 178,000. What is the W.I.N.S. Current Phase? PZN is [I]ncreasing in price towards $30. Buyers should have a position either in the stock or straight PZN calls that they plan to exercise with a BUY/WRITE CC opening transaction. That means you buy the stock by exercising and write the CC at that point. Since, you calls are "in the money" the CCs will be profitable and provide a great downward hedge. So, a [W]ithdraw is going to happen in the near future. The RSI peaking out will dictate that point in time to execute the moves. You found a good one Johndee! How did you find PZN? There is much more upside potential than downside at current price levels! I would rate PZN as a conservative to low moderate risk CC work pony that may turn into a horse!