Hello John and Fellow Readers,
I was scanning the options forums and read the post here. I
have few comments about EMC. I normally moderate another
forum on covered calls writing at SI. It is good for all
that other folks are making contributions to the
educational community on the Internet. That way we can all
learn from each other.
EMC
Among other investor educational tools, my web site at
coveredcallswins.com
generates a nightly listing of the stocks with the highest
percentage of volatility for the last 20-days. On the close
of the trading day of Friday, September 28, 2001, EMC listed
as the 29th most volatile equity stock (213.396%) relative
to its' own historical reading.
29 EMC - EMC Corporation 213.396 227,558.000
Needless to say, the bid/ask prices for the EMC options are
quite high since volatility value is one of three factors
which make up the fair market formula pricing of all
options. (time value, intrinsic value, and volatility
value).
EMC Price Trend?
I guess anyone who is invested in EMC or is thinking about
taking an EMC position would be asking the tough question.
"Is now the time to buy EMC or am I going to see still
lower prices from this point?" The only way to answer that
is to look at the facts and then factor those variables
into your investment objective (bullish or bearish).
At this point, I would be short term bearish on EMC based
on what the technical charts are reading. The charts tell
the bulk of the story.
Monthly EMC Chart Readings
One of my investment rules that I learned the hard way is,
"let the trend be your friend." Clearly, the monthly profile
for EMC at this date suggest a continued downward bias for
the following technical chart reasons:
1. Both Bollinger Bands are heading downward.
2. Exp. moving average is negative.
3. RSI is below 50 and will continue to drop. The current
reading of 33.78 RSI is still within range of making a new
RSI bottom. In other, words, EMC could still fall lower
based on EMC RSI historical readings.
4. OBV heavy money flows continues to drop. EMC bottom
price support could fall in the $5.00 level.
siliconinvestor.com
Weekly EMC Chart Readings
Of the four market phases, EMC is in the final leg of the
distribution/markdown phase and will eventually START to
form a bottom price support level. The weekly chart suggest
that may be sooner than later and the upcoming earnings
release on October 17, 2001 is pointing to lower earnings
expected by an average of -.02 cents per share loss.
siliconinvestor.com
Fundamental EMC Factors?
coveredcallswins.com
Conclusion?
1. I know that there has been a great deal of hype about
EMC over the past year. This is a popular stock and no one
seems to want to bash it. But, if you own EMC you should
have been in a very defensive posture for the past eight
months. Meaning? Deep ITM covered calls as far out in
months as possible to raise cash to offset the EMC capital
depreciation (-80% YTD) and possibly used the money to even
buy EMC PUTs to hedge and even make a profit.
2. For those that don't own EMC, you are looking for a
quick in/out profit the EMC PUTs or EMC LEAPs PUTs Jan03
$15.000 VUEMC @ $5.50 might pan out a $1 (18%) point profit
as EMC bottoms. You could do better with a shorter PUTs
rather than the 03 LEAPs as EMC bottoms.
Well, that it for my contribution today...... |
