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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 (10371)	4/14/1999 7:30:00 PM
From: NateC	Read Replies (1) \| Respond to of 14162

I bought 1000 CYCH at 19 3/16 (too soon, but Oh well- I was expecting support at 19+ based on earlier in the day lows) and as fast as I could sold 5 May20 calls for 2 11/16 and 5 June22 1/2 at 2 5/8. So I had two 500 share lots with NUTs of 16 1/2 for the Mays and 16 9/16 for the Junes. The upside potential on these were 21% for May and 35% for June (no margin). Looked attractive to me! Then the afternoon sell off set in, and I got interested in further protecting my downside. Without the benefit of time to crunch the numbers, while CYCH was dancing around 17, I bought the May20 for 1 7/8, bought the June22 1/2 for 2 1/8, sold the June17 1/2 for 2 9/16, and sold the Jun20 for 2 11/16, reducing my NUTs to 15 13/16 and 16 for June. Of course, I gave up a LOT of upside potential (that didn't look likely to be realized at the time), but still it's 10% for May and 25% for June (no margin). Wow...Dan...this is a lot of trading for me to keep up with. so you bought back your CC's at a profit....and then rolled down selling June 17.5 and June 20 right? You look pretty well protected with the NUTs (didn't check your math).....so it looks quite good. don't know this underlying very well? got any money for a June protective put as well??

To: Dan Duchardt who wrote (10371)	4/14/1999 8:53:00 PM
From: Herm	Read Replies (3) \| Respond to of 14162

Hi Dan! You had some lighting fast action today. And, you nailed each extreme swing in the volatility in your favor. Ride Em cowboy! CYCH is not expected to make a profit this year. So, I can't see CYCH breaking into a new high and staying there for any length of time. The chart pattern for the past two years confirms the trading pattern for CYCH. The RSI is just about peaked out and the upper BB is enlongated. Not much upside remaining in CYCH. NASDAQ: (CYCH : $18 3/16) $201 million Market Cap at April 14, 1999 Loss Expected for 1999; Internet Products & Services SubIndustry priced at 547.8X PE. bigcharts.com The trading ticks show a compliment to the chart. Only 2 large blocks today versus 4 yesterday. And, each day other large block cancelled out the other. Today, the spread was massive for the short against the box. Normallly, it would seem easier to short CYCH at this point than trying to make a new high except that CYCH with a small Float: 8,000,000 shares; Daily Volume: 830,600 shares/day; has a super fast float turnover Rate of only 9.63 Days! WOW! This is one rock n roll stock Dan. Just as long as you understand the dynamics of this viper you can be on the right side of the momentum. The serious money is not going to stick around and leave the money on the table. CYBERCASH INC (NASDAQ:CYCH Last Sale: 18 3/16 -2 15/16) CYCH Trading Summary 14-APR-99 Ticks Money Flow($MM) Avg. Price Small Blocks +502 -520 +6.3 -5.7 20.0454 Large Blocks +2 -2 +0.7 -0.4 22.1125 Total: +504 -522 +6.9 -6.1 20.1479 13-APR-99 Ticks Money Flow($MM) Avg. Price Small Blocks +583 -550 +6.7 -7.1 18.4499 Large Blocks +4 -4 +0.9 -1.4 18.2461 Total: +587 -554 +7.6 -8.6 18.4296 MyTrack is an interesting piece of software. The "trading contest" has some interesting applications even for WINs learners out there. It would be possible to test run the applications of WINs. Hummmm?

To: Dan Duchardt who wrote (10371)	4/14/1999 9:16:00 PM
From: David Wright	Read Replies (1) \| Respond to of 14162

Dan, I hate to say this, but if you had just sold 10 May 20 calls, and turned the computer off, you would have had a 11 1/2% ROI for May without exercise, and an upside potential to your 20 strike, which would have given you a 24% ROI for May. This would also have given you 14% downside protection,to 16 9/16, which is double what McMillan recommends. I presume that you love the stock, so without exercise, you could just start the dance over again for June. I recommend saving your trading "silver bullets" for when you really need them, not just to pick up a few 1/8s in day trading your covered calls. I also cannot recommend trading "on-the-fly" until you have at least 500 trades under your belt, and can divide 17 by 32, and actually get the right answer without using a calculator. I've done nearly a thousand trades in the last two years, and I still plug it all into a computer spreadsheet before I trade...especially these covered call, straddle combinations, which give me a mental headache. (also, I don't have a clue what 17 divided by 32 is...more than 1/2...I think.) I assume that Herm will comment on your stock selection regarding fundamentals. You plainly used a daytraders' thinking to jump on this one today. The 5 minute chart for the close yesterday made it pretty clear that the stock was going to gap before the open. After that, it acted like virtually every strong gapping stock does...it jumped up for another 20-30 minutes, then fell hard, recovered a bit with lots of jitters, and then fell the rest of the day. I really recommend Jake Bernsteins book, "The Compleat Day Trader" if you want to learn about classic 5 and 15 minute trading patterns, and rules for entering trades like the one you did. I also recommend the use of IQC's real-time chart service for stock day trading. It is the best tool I have ever seen, if you believe in TA voodoo (which everybody that day trades does, including me). Finally, DATEK's real time Streamer service is worth opening an account with them for $2,000. Another "best on the web" for dead accurate quotes and activity as it happens. Too bad DATEK doesn't do options. We would all have the broker we want.