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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: Jonathan Thomas who wrote (10569)	4/28/1999 4:39:00 PM
From: Herm	Read Replies (1) \| Respond to of 14162

Don't get involved with IDXC. Expects a loss and the open interest is dead. Not a good stock to CC or own long. Perhaps a good short!The current raise a dead cat technical bounce. NASDAQ: (IDXC : $16 1/2) $427 million Market Cap at April 28, 1999 Trades at a Premium PE Multiple of 68.8 X, vs. the 15.7 X average multiple at which the Medical Services SubIndustry is priced.

To: Jonathan Thomas who wrote (10569)	4/28/1999 10:44:00 PM
From: Jon Tara	Read Replies (1) \| Respond to of 14162

I wouldn't think that volume would be of much concern when following the strategy being espoused here. You're writing in-the-money calls. They are going to be traded thinly, unless it's a very heavily-traded stock. The spread is going to be wide, and the specialist is going to be the one buying the contract most of the time. He's probably going to convert it, and expects to be paid handsomely for that. Obviously, you'd want to be on the lookout for appropriate options to write that have a tight spread, but most of the time I think you'd just have to resign yourself to paying the specialist for doing his job. While I don't often do covered calls, I do usually deal with the strikes that are involved in these plays. I'm the idiot buying the calls that Herm is selling! :) (Actually, it's usually the specialist, as I said. I'm the occasional individual who will buy these and try to meet Herm in the middle and cut out the specialist...) I buy long calls, but always 2-3 strikes in-the-money and a never (almost never) the expiring month. I live the the wide spread, and it makes me that much more cautious about entering a position, because it HAS to move just to get the spread back. Herm? What say you? Do we CARE about option volume? (I'm studying this thread and considering this approach - I think I'd like to own the oil sector for the rest of the year, but think the rest of the recovery will be slower. It could be attractive to write calls that have had premiums boosted by the fact that there have been so many doubles in this sector over the past month or so.)