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Technology Stocks : Vitesse Semiconductor
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To: carpe diem who wrote (557)4/14/1997 11:22:00 PM
From: Carl R.   of 4710
 
I think Clint is less brave (foolish??) buying puts the day before earnings in a down market than you are for going short on a long term basis on a company growing at 100%/year. When the new fab adds capacity, sales are earnings will shoot up. Remember, they have essentially no competition, so the only question is growth of the overall market, and their ability to predict demand and the need for capacity. It seems to me that they are in a better position to predict future demand than you or I do (certainly better than I do).

I sold the calls just as a method of collecting some income short term in what I percieve as a bear market. I missed my opportunity to buy them back at 1 7/16 (a small profit) when I got called away from my office. When I returned, they were over two. I hope for another down day so I can get them at a reasonable price (i.e. below 2). I no longer expect this stock to see prices in the 28-29 range again unless the whole market tanks extremely badly, in which case there are no doubt other stocks where your shorts would be better rewarded.

Good luck on those shorts - I think you'll need it, and my advice would be that if a bear market does drop the price below 30, take the opportunity to get out of your position, because on another rally, I am pretty confident that this stock will hit a new high.

Carl
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