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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: NateC who wrote (10057)	3/24/1999 5:45:00 PM
From: David Wright	Read Replies (2) \| Respond to of 14162

Herm, How about a critique of my first two tries at the WINs strategy? Monday 3/22/99 Bought 500 shares of SAVLY @ 12 1/2 (on margin) Sold 5 QVY MAY15C for 1 5/8 used proceeds to buy: 8 QVY MAY17.5C @ 1 Tuesday 3/23/99 Bought 500 shares of MWL @ 13 on Tuesday 3/23/99 (on margin) Sold 5 MWL OCT15C for 1 3/8 used proceeds to buy: 5 MWL May12.5C at 1 11/16 Note that I tried several different expiration date combinations. Both sets of combinations net out to pretty close to a zero option cost basis at the combined opening of the positions. In other words, my sideplays are being paid for by the buyers of my covered calls. I am a little troubled by the lack of downside protection by going to a net zero position right away. Please pick this apart. You can't hurt my feelings, even if this turns out to be a case study in how NOT to do WINs. Thanks

To: NateC who wrote (10057)	3/24/1999 7:50:00 PM
From: Herm	Read Replies (2) \| Respond to of 14162

SAVLY David's SAVLY has a growth rate of 34.63% and P/E of only 10! WOW! That's a heck of a discount! NASDAQ: (SAVLY : $12 5/8) $435 million Market Cap at March 24, 1999 Trades at a 58% Discount PE Multiple of 10.8 X, vs. the 25.8 X average multiple at which the Data Processing subIndustry is priced. Data Processing SubIndustry up .87% / Services Industry up 1.24% Today Short Interest for SAVLY is 5.1% of the shares outstanding, requiring 2 days to cover. With a float turnover (TRO) of 21.44 days it could pretty fast price wish in four weeks! iqc.com Thus, a recent bottom and a second test of the bottom followed with David's entry right around the time the lower BB was tagged and the RSI was very low for this stock. So, it should have enough lift to the $15.00 with the short covering. At that point, SALVY will need news like the earnings release which have been pretty good. The only comment I have is that by CCing this early you are basically going very bullish in your position. I would have waited until SAVLY tagged that upper BB and the RSI crossed over the 50 marker to make sure this sucker was at a high level in order to lock in bigger premies. But, this could very well work out IF SAVLY continues to move upward. Those sideshows long calls will look mighty good. I wrote 8 CCs for the BTGC July 5s two days ago picking up $1,350. Now, BTGC is going down like the chart indicated. When BTGC bottoms I'm planning on buying long calls at the money in order to ride that sucker up and be called out! Those CCs are paying for my long sideshow calls and that will provide a nice perk since my net cost is very low!