Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: David Wright who wrote (10655)	5/8/1999 3:07:00 PM
From: tuck	Read Replies (1) \| Respond to of 14162

Dave, I pretty much agree with you on all this. I've learned not to force trades. It is obvious that if I were to trade using true daytrading time scales I'd have to pay up for real time feeds. I don't do sideshows, either, rather roll up and down, because that seems less risky. I use some margin, but have gotten burned by using a lot. You really don't want to get margin calls while CCing! Call me a "swinger" as opposed to a daytrader. I am able to follow the market almost every morning quite closely. It is what I do for a living right now (though I haven't burned the bridges to my "real" job). I use FA and daily chart WINS TA to select my picks, just like the rest of us here. The difference between me and some others is that once I "qualify" a stock in this way, my time frame between transactions is not months or minutes, but several days to a couple of weeks. This is because the time premium decays the fastest in the last two weeks. That is why I only go one month out; near term options capture the most time premium. Something has usually happened to the time premium in the option in less than a month, though; usually in a couple of weeks, a substantial portion of the time premium has eroded because the underlying stock has moved away from the strike price. I then look for the next appropriate strike that has more time premium in it, and roll to it. The caveat is that rolling up increases risk a little (because it's a debit), but no more so than by doing sideshows, I would think. So what folks using this approach want is the optimal TA system for catching the tops and bottoms of these one to two week swings. It would definitely be based on daily or hourly data. I am thinking, for example, that had I used hourly charts on PAIR, I might have confirmed the short term top that my gut was telling me had been reached. Herm looked at a daily chart for me, and suggested I hold. That would have worked for May calls, but not for the Aprils I wanted to write to get that fast-decaying premie. My question is what indicators are most appropriate for catching these one to two week swings? BBs and RSI may be OK, though stochastics might be better than RSI. I suspect MACD might not be so useful in this time frame, though OBV might be. I invite other folks to look at this, and to learn "how stock prices respond to the indicators you see evolving on the screen," as you put it. Time for a bit of backtesting, I reckon. Cheers, Tuck