Jim,
Good rational thinking - IMO. I find it amazing that there can be almost 2.5 Million shares that are short. It would take trading (buying) of almost 5 million shares by just the shorts to cover their positions. That's simply incredible that we haven't seen some sort of short squeeze.
Although we may see lower pricing in the short term, this area would seem to be a good entry point, as volume has almost dried up and there isn't as much selling conviction by the shorts, or fear by the longs, as there was when THQ was at the $26-$24 area.
To those looking to get into THQI, here's a short term strategy - say within a month, of obtaining the stock and at an even better price ( given the excellent premiums on THQI options). First, buy half of your anticipated position now and sell 'at the money' (ATM) Calls on that position. For the balance of the anticipated position, you could sell ATM (or slightly below the money) Puts. If the stock was to go lower and stay there over the next month, you would get to keep the call premium on half the position. For the balance, however, you would likely be 'put' the shares at the strike price.
Notwitstanding, you would still have the premiums from the calls that were sold as well as the premiums received from the puts to cushion the fall.
This strategy should only be used if you do not mind owning the stock as the market can always prove you wrong no matter how well you do your homework.
However, if the stock was to rise and stay there, you would likely be 'called' on the shares and have to sell the position. The good point is that you get to keep the Call and the Put premiums - which are very good in light of recent volatility.
This is not Investment advice. I'm sure most people who contribute on this thread are well aware of this. However, if you are an observer, you might want to talk to your investment advisor about this strategy - especially now that THQ is so cheap.
Brian |
