nlam, you are correct. Actually, I should have covered about two weeks after I shorted since AOL dipped down to 74. Could have walked away with a tidy profit. I am playing a tax game at the moment, so, keeping the position open is more of a game to me at this point. I do not care to have a major loss, but, I think the downside risk is greater than the upside potential over the next quarter.
Yeah, sure, we all know that AOL will beat earnings, guess what, that just means that earnings estimates are a joke and the stock has been pumped all along. Basically, the rest of the world knows this too. Look at Yahoo!, still below its high of $207.50 which was set prior to or just after their earnings/split announcement. What does that tell you - basically, that all the good news is built into the stock prior to the earnings release. I would expect after earnings that AOL will decline about 7-10% from the day before earnings are announced.
Probably, the best short-term strategy is to buy out of the money Aug puts (say 125's if the stock is around 130) just prior to earnings being released and then see what happens. This would be purely speculative, but, maybe worth a try.
For what its worth, I'll let you know when I cover.
Regards, Keith |
