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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: fubsy cooter who wrote (10472)	4/21/1999 8:40:00 AM
From: Herm	Read Replies (1) \| Respond to of 14162

Hello Fubsy, Looking at the chart, the NOVL lower price support is around $20 for now. The RSI is low and approaching the oversold point. Looking at the trading ticks for the past two days shows downward pressure and low trading volume. Average volume has been around 7 million. So, the downward move should continue. Now, there has not been a re-test of the recent 52-week high. That event should happen BEFORE a major decline below $20. There is some value in NOVL. NASDAQ: (NOVL : $21 1/2) $7,505 million Market Cap at April 20, 1999 Ranks 734th in the Fortune 1,000 on Revenue & 517th on Profit. Employs 5,800. Trades at a 17% Discount PE Multiple of 43.9 X, vs. the 52.7 X average multiple at which the Networking SubIndustry bigcharts.com NASDAQ:NOVL Last Sale: 21 1/2 -1/4) NOVL Trading Summary 20-APR-99 Ticks Money Flow($MM) Avg. Price Small Blocks +381 -392 +6.4 -5.8 21.1191 Large Blocks +10 -12 +4.0 -5.0 21.1586 Total: +391 -404 +10.4 -10.7 21.1307 19-APR-99 Ticks Money Flow($MM) Avg. Price Small Blocks +343 -348 +7.0 -6.4 22.2536 Large Blocks +14 -15 +5.3 -8.2 22.3151 Total: +357 -363 +12.3 -14.6 22.2744 If you want to play it conservatively you could CC the 25s NOV @ 2 5/8s for 2+ downside protection and an upside profit potential if you get called out at $25.00. Further, you could the CC premies at your CC B.E. of $25 strike + $2 = $27 price to capture any upside potential while you are locked into the CCs. That would cover you position in both directions. Normally, LEAPs that are deep in the money are not called out. That would be rare to be called out when one year or more worth of LEAP time remains. It's not impossible, but, don't count it as part of your trading strategy. PS - The NOVL LEAPs look good! I like the 10s Jan01 @12 7/8s and then CC against the LEAP (calendar spread) the 25s NOV CALLs @ 2 5/8s. That's 20.29% if not called out and another 2 1/8s in the stock for a total return of 37% unmargined less commissions.