Hi Peter,
Welcome to the forum and thanks for submitting your question
so that we can learn and share the pros and cons of
strategies. That is how we learn to sharpen our trading
habits and not repeat mistakes more than once.
IFMX
Now, let's review the situation here. I have been in IFMX
since DEC. 1998 and average up to 800 shares on the dips
using the CCs premies to pay for a good portion of my
position. So you know, I will have somewhat of a bias for
IFMX. There have been some nice opportunities to unload
IFMX and buy it back on the retreats. The CC action has
been pretty good. It's like baiting the hook and getting
fish each round. :-)
IFMX TECHNICALS
The IFMX bottom was that blowout the other day when 20
million shares traded on the news release that people mis-
read on old news that caused IFMX to fall out of favor in
the first place over the past three years. I covered my
IFMX 8 contracts and I'm holding at this point for higher
IFMX prices since the earnings release is coming 5 pm on 26
JAN. If you want to listen to the conference calls
vcall.com.
siliconinvestor.com
The weekly chart profile above have some solid technical
trend information which is critical to your decision.
1. The weekly profile shows a upper and lower BBs with the
moving average (the red center line between the BBs) heading
on an upward slant north! Very bullish sign.
2. A solid lower BB tag has occured and all the other
indicators are heading upward. That is, the RSI = 60.35,
OBV is steeply angled and upwardly positive meaning money is
moving into IFMX rather leaving. Volume has been increasing.
The RSI and OBV has plenty of upside range to go before a
pull back.
IFMX FUNDAMENTALS
1. No earnings warning means good numbers or at least on
target. The new CEOs would not drop a bomb on the street
since they are trying to recover from the mess the other
former CEOs left IFMX. It seems they are pulling it off!
Asia is recovering and they continue to buy up companies.
Y2K unknowns is history and it's business as usual.
2. There was a whoppin amount of short interest for IFMX in
December 1999. There is enough for a two day pop to cover
just that short interest. The majority of those shorts most
likely covered on that 20 million share day. More will
slowly continue to cover which will help the up trend in
price. They have enough of a profit for the shorts since
the average price in December 1999 was around $12.00 to
$13.00. With that short interest liquidity dried up and all
the weak hands out, it's possible IFMX will break above
that $13 to $14 on this run. The CEOs know that they need
to impress the street!
Month Short Interest Pct.Chng Avg.Volume Days to Cover
Dec 99 7,708,440 +119 7,563,240 2
Nov 99 3,517,999 +11 2,683,324 2
Oct 99 3,182,061 -5 1,850,395 2
Sep 99 3,343,421 -11 1,262,939 3
Aug 99 3,737,502 -7 2,049,199 2
Jul 99 4,030,642 -5 2,717,472 2
Jun 99 4,242,438 -8 1,547,150 3
May 99 4,610,233 -4 2,607,113 2
Apr 99 4,785,872 -1 3,250,091 2
Mar 99 4,815,707 +0 2,612,771 2
Feb 99 4,792,717 -15 5,267,797 1
Jan 99 5,650,346 -40 5,918,222 1
Conclusion
If you covered now you would just about break even with the
net cost value of your IFMX entry and the current value of
the stock. So, you are still in the game. I would lean
towards covering at loss which is something I don't often
do. In this case, if you execute correctly before that
earnings release, you should be able to increase your profit
potential and still own the stock.
IF IFMX MOVES UP!
If you held your position until at least the day of the IFMX
earnings release you would have a better idea of the next
CC strike price for another round of CCs to recover your
give back now. The charts indicate higher prices as the
trend. You need to monitor the charts. Switching to a daily
chart profile might be more of a benefit for accertain the
exact kill zone price. After all, we know the over trend
provided by the weekly profile.
If you can afford the risk, you could wait and CC AFTER the
IFMX earnings release date. I would not try that unless you
have some cheap PUTs in place before that news release.
That way, you can let IFMX run if it takes off after the
announcement and grab a higher CC premie later to make up
for the expense of the expense of the PUTs.
IF MOVES DOWN
If IFMX dumps, then you would have the safety net in place
with the sideshow PUTs and could immediately cash out of
IFMX or CC IFMX in the money a few months out with fat
premies for the ride downward. At that point, you could buy
additional sideshow PUTs for a greater profit hedge.
Another possibility is not writing the CCs on a dump and
short against the box yourself. That means, you short IFMX
big time since the margin downstroke is fairly small
compared to paying cash for the PUTs. |
