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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: Dan Duchardt who wrote (10156)	3/29/1999 9:58:00 PM
From: David Wright	Respond to of 14162

Dan, There is a dreadfully poor book available, called the "Electronic Day Trader", which sort of explains the MM and ECNs situation. It costs $34.95, and you can buy it off the web. After reading it 5 times, I sort of think what really happens when you day trade with a broker like DATEK, with relatively small lots of stock, is that you will often get matched up with a non-MM counterpart on an ECN. All of which means that using level II doesn't make a lot of difference if you are trading less than 1000 shares anyway. My view is that you should pick the price you want after looking at the day trading charts, and stick with it. The way stocks move around during the day, you will likely get a hit at your price. If you don't then you probably avoided a reduced CC ROI anyway.

To: Dan Duchardt who wrote (10156)	3/30/1999 12:34:00 AM
From: tuck	Respond to of 14162

Dan, MM's aren't always so obvious. Check this out. It's an academic piece and rather dry, but read between the lines for the implications. Which are that these guys can still do what they want with the spread. By order shuffling, they have some control over the way prices are displayed, no matter if you've got Level II or not: busadm.mu.edu I tend to split spreads. I'll buy slightly below ask, sell slightly above bid. Opening a buy and CC usually works OK on a stock with moderate action, as opposed to a big news day: the stock and options shuffle around a little to fill my orders, instead of embarking on a news-driven trend. Having a stock go on a wild ride while you're in the middle of establishing a hedged position can be great if it trends up (assuming you're going long first), lousy otherwise. Hence the buy-write's appeal. However, I think the above rules get me spreads similar to buy-write's, but saves the premium commission cost those usually entail. Cheers, Tuck