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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: Gary E who wrote (9789)	2/28/1999 10:55:00 AM
From: Casaubon	Respond to of 14162

The point is, if you want to own a stock (let's say you evaluate the fundamentals and like what you see) then, in the long run, you are better off writing covered calls (and collecting a time premium which decays away) then just sitting on the stock. Thus, if you, for whatever reason, decided to own $100,000 worth of compaq stock on thursday, then friday you would have stock that was only worth $87,000, UNLESS you wrote covered calls. IF YOU CC'ed THE STOCK, YOU WOULD HAVE LOST LESS THAN SOMEONE WHO DID NOT! You seem to have wonderful hindsight! Can you predict the next stock that will drop 13%, in a day? If so, short it, write calls, and buy puts!

To: Gary E who wrote (9789)	2/28/1999 8:40:00 PM
From: JimsJeeps	Read Replies (1) \| Respond to of 14162

Hi Hal, Over the past year and a half, CPQ has been a stock that has been held by some of the folks on this thread. I started out buying it at $67.5 pre-split. (the last 2 for 1). Knowing what I now have learned from this forum, I certainly would not have entered at that point, but I did. Now having utilized the WINS techniques, I have lowered my nut to under $24 per share. The puts Herm referred to were some cheap $32.5's that I picked up when the stock was in the mid $40's a month ago. I also have some CC that I intend to buy back this week and pocket some nice profit. I do agree if one bought the stock " north of $50" a short time ago, it would have been a tough day Friday, however if the CC was sold and you took some of your premie $ and bought some cheap protective puts, you would still have had a grin on your face Friday evening. Jim

To: Gary E who wrote (9789)	2/28/1999 9:03:00 PM
From: Herm	Read Replies (2) \| Respond to of 14162

Hi Hal, Good question Hal. One of the built-in rules or assumptions when applying the WINs approach is that you monitor the price movements using the two technical indicators. That is, the Bollinger Bands (BB) and the Relative Strength Indicator (RSI) for each stock you own or are considering owning. Once, you have a working knowledge of the process, applying WINs is straight forward and any investor that took the time to learn about WINs can jump on board any stock and know how to anticipate the extreme pivots. So, with that said, I'm only confirming what should be the thought process at this point after the CPQ dump. CPQ split 2-1 last year on Jan. 20, 1998. Any split increases the float. Increased float requires more trading volume to keep the stock afloat. The float turnover (TRO) even changes the charteristics of the stock. Now Hal! This WINs works so well that if you take a look at the chart below you will notice that the CPQ price was heading towards the upper BB and AT THE SAME TIME THE RSI WAS DROPPING! That is a classic early warning of a dump. How can the stock price go up and the strength continue to drop? That was the MMs shorting the stock at higher prices before the panic was set off. iqc.com So,in summary! Don't apply WINs and you just loss your shirt! Play the game this way and you will rarely have sleepless nights and major hits. It only takes one to set you back big! Thanks for your watchful eyes and spot checks! :-)