Hi Vol,
I wish there was an easy way to screen for high Alpha stocks....I simply go through the IBD Daily Graphs and as it turns out, a lot of the real big movers (chart-wise) are therefore high alpha......not too hard to spot, but it takes some time. Telescan (unfortunately) doesn't offer that criteria in a prosearch form.
I never buy a stock with poor fundamentals, because they're too unpredictable.....ASMLF has an IBD relative strength (to the S&P) of 99-- The highest possible -- and they're in a r&d intensive business so the earnings have been temporairily off the last couple of quarters, but the growth rate (109%) and the debt (0-zero) make this the right kind of company to be watching........I think the reason this recent "buying opportunity" happened was the sympathy downmove with Cymer (whose problem is STILL unclear for some reason).
In any case, if you open the trade as a credit spread, even if the stock plummets AND stays there, you are still down only a couple of points, because remember, you sold the deeper calls, so they cover your downside...........contrast that with holding the stock ! How would you like to be holding Cymer right now ?
This is just my opinion, of course, but for high-flying stocks, I like the options approach better than holding the common stock because it can go up enormously, but your downside is limited.
Seeya,
Dick |
