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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: FRANK P. WARDA who wrote (9177)	11/25/1998 5:33:00 PM
From: Douglas Webb	Respond to of 14162

Dell is withdrawing right now, and it looks to me like there's support at $60. I would use that as my floor, and try to write calls at that price or higher, assuming I want to keep the stock. Since Dell is at $64.50, the $65 calls are about at the money, so they have the highest time value. If Dell drops to $60, the $65 calls will be very cheap to buy back, so this works out well. The Dec $65 can be written for $3.000 x 2000 = $6000 The Jan $65 can be written for $5.125 x 2000 = $10250 Both are nice profits even if the stock gets called away. Doug.

To: FRANK P. WARDA who wrote (9177)	11/26/1998 1:23:00 PM
From: Herm	Respond to of 14162

Congrats on your Dell profit. I can't help but think how much upside there is to DELL vs. downside. It does sell for a steep 61.4 price/earnings relative to it's growth 29.57% rate! NASDAQ: (DELL : $64 1/2) $84,220 million Market Cap at November 25, 1998 Ranks 174th in the Fortune 500 on Revenue & 156th on Profit. Employs 10,350. Trades at a Premium PE Multiple of 61.4 X, vs. the 30.0 X average multiple at which the Computers SubIndustry is priced. askresearch.com I would take the profit money and move on. You could force yourself to be called out by selling deep in the money CCs like the Jan. 60s @ 8 1/4 x 20=$16,500. It looks like Dell will bounce off the lower Bollinger Band at that $60. If DELL breaks it you have plenty of downside protection. A bit conservative I guess.