Not sure what you mean by capitalizing on this weakness....but I'm assuming you think this is a short-lived phenomenon. I personally wouldn't be buying here just because as a general rule, picking bottoms is very hazardous to your portfolio. If you really like the company and plan to hold, you could do one of several things:
1. sell calls ATM, this just gets you back some of the money you lost. If the stock does rally above your strike you can roll them up, or you can cash out.
2. Sell puts OTM. Gives you some money you lost but there is a risk the stock can get weaker then you're stuck buying more stock you may not want to own. If you are certain this is just a short-term aberration and are confident the stock will rebound soon, then sell puts ATM. Just be ready to pony up for more common.
3. Sell covered calls and naked puts, both OTM. Gives you a chunk of change but this strategy is best for stocks that aren't going to move much in one direction or the other before expiration..ie. you could end up owning more stock at your put strike price (as in #2), or you might lose your common (or be forced to roll up).
4. Sell calls to buy puts (usually both OTM)--gives you a no-cost hedge which protects your downside, maybe not 100% protection but better than doing nothing. Of course you could lose the stock if it rallies above the call strike, or you could roll them up.
Finally, you should be paying attention to your tax implications..options gains would be short-term. Bottom line, don't expect BRCM to jump back up into the 200 range soon, I feel pretty confident thats not going to happen, but you have to make your own calls..good luck to you. |
