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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: Douglas Webb who wrote (9209)	12/5/1998 11:08:00 AM
From: Herm	Read Replies (5) \| Respond to of 14162

BTGC READY FOR A BREAK OUT? On Friday, the final BTGC price movements solidily tagged the lower BB and the RSI is fairly low. Well, according to the W.I.N.S. approach CCs should be covered and a should expect a reverse in price this week. Consider some of the factors: 1. The RSI is at just about 30 and the all-time low when BTGC really bottomed out in the the recent 52-week low was at about and RSI of 20. Therefore, there is more upside potential then downside and no BTGC news that is negative at all! 2. Most big cap stocks are once again highly priced and are due for another correction. BTGC is selling at a cheap price. NASDAQ: (BTGC : $6 13/32) $302 million Market Cap at December 4, 1998 Trades at a 54% Discount PE Multiple of 17.8 X, vs. the 38.5 X average multiple at which the Drugs SubIndustry is priced. 3. BTGC has a growth rate of 25% and only a P/E of 17.8 which is below the industry norm. 1998 earnings is expected to come in at .36 per share and maybe more! The fair BTGC value would be .36 EPS x 38 P/E for industry = $13.60. With a 25% growth rate that .36 EPS should increase to .45 in 1999 with a .45 EPS x 38 avg. P/E = $17.10. Even at the current P/E of 17.8 * .45 EPS 1998= $ 8.01 stock. That's a 25% price appreciation without even factoring in several rounds of CCs along the way! CCers should be able to squeeze out an annual 35% to 45% rate of return with BTGC. 4. BTGC short interest shares has been decreasing while the trading volume has been increasing. If the BB narrowing bands indicates low volatility and a pending price gap there is high possibility of a breakout to the upside. When MMs and funds start covering short positions that is sign that they have more confidence in the stock! In fact, BTGC had the biggest short position decreases for 6 consecutive months. techstocks.com Short Position Decreasing for 6 Consecutive Months Item Ticker Symbol Company Name Short Position Avg Daily Volume Ratio* 1 BTGC Bio-Technology General Corp. 3,194,411 394,426 8.10 2 CMPC CompuCom Systems Inc. 65,574 175,497 0.37 3 CUBE C-Cube Microsystems Inc. 1,851,051 306,640 6.04 4 FRTE Forte Software Inc. 721,857 73,706 9.79 5 GENE Genome Therapeutics Corp 21,033 162,549 0.13 6 IFSIA Interface Inc. 439,855 280,476 1.57 7 INTU Intuit Inc. 1,422,223 948,606 1.50 8 PRST Presstek Inc. 3,305,952 134,406 24.60 9 UGLY Ugly Duckling Corporation 1,406,898 229,220 6.14 Ratio = Shares Short / Avg Daily Volume; it may be used as a rough measure of days to cover. askresearch.com FORE - PULL BACK ALERT* Our friends with FORE watch out! FORE tagged that upper BB and the RSI is just about peaked. Pull back should come this week. Write those at or in the money CCs for the ride back to $14.00. The FORE JAN 15s @ 4 or the APR 17.5s @ 3 7/8s look mightly inviting CC premies that you could cover when FORE tags that lower BB in a few weeks! askresearch.com