A "Mayoral Candidate"

Our esteemed "Mayor Pro Tem" of Jamestown, Keith Volz made a comment on yesterday's post. He asked me my thoughts on WCG as a Covered Call trade. While I don't know if Keith is already in this play, let's take a look, shall we? Here's the chart:First off all, where the HECK was I when this baby broke 3 Green Arrows last July? Holy smokes, talk about a stock "en fuego" (that's "on fire" for you Gringos). WCG has doubled in price in less than a year. Certainly a strong, uptrending stock. However, it is at the top of an Ascending Channel and the MACD and STO indicate a pullback is imminent. I would wait until this drops into my highlighted area (or at least to that bottom line) and look for a bounce to get in. I would then ride it up to the top and depending on how much it rose, sell a Covered Call. Say it drops to $75, I buy. Then if it gets close to the top of the channel again, I wait till it begins to fall back, then sell my CC. For example, if the top of the channel is $88, I would sell an $85 instead of a $90. Why? Well, the premium would be much better since I am already $2-3 In The Money, so I would get that intrinsic value. But also, since it is falling, I expect it to fall below $85 before expiration. Since Delta is working in my favor on the downside, once the stock hits the channel support, I buy back the call for a little bit of money and retain ownership of the stock. I may even add more to my position down here on a bounce, then let it ride up to the channel top and sell even more Calls. I'll try to create an example of this method in a few days so everyone can see what I mean.

Anyway, great stock Keith...why didn't you tell me about this back in July/August? =P

Happy Trading!