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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: Dnorman who wrote (10424)	4/17/1999 11:34:00 AM
From: Greg Higgins	Respond to of 14162

DNorman writes: I sold some naked 90 puts on MER and I will be assigned on them. It looks to me like the RSI is going down and it could bounce of the lower BB soon. I was curious of what your thoughts are on MER? Consider the following: MAY JUL Call Put Call Put 80 9 1/2 2 1/4 12 1/4 4 5/8 85 6 3/8 4 1/4 9 1/2 6 3/8 90 4 1/8 6 3/4 6 7/8 9 If you don't have enough money to buy a second round of MER, sell the May 80 calls and get out, a stock which ranges from 110 to 40 and back over the course of a year is really to volatile to make any assumptions about when you're over extended. Trim your investment and diversify. If, on the other hand, you do have enough to buy a second round of MER, then I would sell both the calls and the puts at some strike. The highest strike 90 if I really liked MER, (which I don't) and thought it was going up, and the lowest strike 80 if I just wanted to clear some more $$$ from the trade.

To: Dnorman who wrote (10424)	4/18/1999 9:22:00 PM
From: Herm	Respond to of 14162

Greg's suggestions make sense. If they put it to you, the MER $80 should be the bottom support for MER. If it breaks below that watch out! That's possible drop to the 60's. Sell CCs to raise premies and then load up on cheap PUTs to hedge against drops. That's if you don't back back those naked 90 PUTs. You could that and buy the LEAPs instead of the stock. NYSE: (MER : $87 1/16) (MERpA : $30 7/8) (MERpE : $25) $31,134 million Market Cap at April 16, 1999 Ranks 28th in the Fortune 500 on Revenue & 45th on Profit. Employs 48,900. Trades at a 20% Discount PE Multiple of 17.8 X, vs. the 22.3 X average multiple at which the Brokerage SubIndustry is priced.