NOTES ON DELL COMPUTER (DELL)
Covered Call

1. After dropping out of a higher trading range, Dell trades
down throughout the months of December 2002, January 2003 and
into mid-February 2003 before bottoming out. During this period
of time, the drop was a low volatility, gradual one in which the
stock loss could have been well offset by premium collection.

2. After rebounding off a low around $22.50 in mid February,
Dell rebounded quickly to the $26.00 -$27.00 level where it
consolidated until mid-March. The stock traded in a tight band
until starting to trade up.

3. After the consolidating period, Dell began a slow, deliberate
rise over the course of the next 9 months or so, with most
months showing an overall trading range of $2.00 or less. The
long, slow, step like growth pattern can be seen both in the
daily trading ranges, as well as in the monthly trading ranges.
This is very favorable to writing covered calls.

Conclusion: Dell spent the better portion of nine months trading
up in a manner that is suggestive of decreasing volatility.
Because the stock was in an up trend, and a gradual one at that,
a buy-writer would have been able to profit from capital
appreciation as well as a having a good chance at seeing a
positive return in terms of the collection of premiums.

Furthermore, during Dells down cycle, the stock traded down
slowly enough to be able to receive several months of premium.
This should have, at least partially, offset enough of the loss
to allow the trader time to profit from the subsequent recovery.