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Technology Stocks : Rambus (RMBS) - Eagle or Penguin
RMBS 88.13+1.0%Nov 21 9:30 AM EST
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To: Jdaasoc who wrote (24912)7/16/1999 1:42:00 PM
From: JH  Read Replies (4) of 93625
 
I believe that we are in the midst of the "knee" of the inflection point where there is plenty of volatility due to the uncertainties surrounding manufacturing, licensing, and adoption of RMBS products.

(Sorry, perhaps we've just recently PASSED that inflection point)

The historical volatility will surely moderate as mass production is realized and the actual products are shipped.

Hence, this is a great opportunity to short historical volatility, particularly the longer-dated puts. The stock will undoubtedly have an upward bias in price over the long term - so the risk of assignment should be low.

For example, the Jan-2000 $110 puts are now bid at $20-1/2 (implied volatility of 73%). The Jan-2001 $110 puts are now bid at $33-3/8 (implied volatility of 74%). The Jan-2002 $110 puts are bid at $40-1/2 (implied volatility of 74%).

I believe that any of these are GREAT shorts. You see, options are often priced based on HISTORICAL volatility. If future volatility moderates, the value of these options will decay even faster !

I think that the breakout gap between $97-9/16 and $101 has a chance of being tested during an upcoming market "correction". Breakout gaps are good supports (if the stock does not trade under - in which case the breakout is invalidated).

I will be shorting puts aggressively if and when RMBS trades down to $100.
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