Novell (NOVL) dirt cheap, good buy? Message Board

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Technology Stocks : Novell (NOVL) dirt cheap, good buy?

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To: tang who wrote (11008)	4/10/1997 1:16:00 PM
From: E_K_S	of 42771

To All: My strategy for generating income on this stock while we wait.... I have been reviewing the option preminums and many of the outstanding posts from this thread and am trying to develop a strategy for generating income while I wait for the new Novell to get back on their growth curve. For the last three years invested in this stock, I have actually made a decent return and have also maintained a positive equity return eventhough the stock is near it's five year lows. I concur with Salah that all of the pieces are in place for a significant turnaround by Q4 1997 or Q1 1998. However, I want to hedge my bet without giving away too much of the upside away and thought other investors on this thread may have the same strategy in mind. IMO, the street is waiting for the "new" and improved business plan from CEO Schmidt and any and all new management changes. I believe the stock will ralley based on these announcements. This information should hit the street no latter than by the annual meeting held the secound week in May. AFTER this meeting, it is possible that we may begin to see the larger institutions begin to nibble at Novell, which will reflect a steady 'positive' on-balance volume near term. I plan to write covered calls on 1/2 to 2/3 of my position prior to the annual meeting to expire sometime in August or November. I am expecting the stock to trade flat during this period until earnings results (from CEO Schmidt's changes) are posted. To track the change in option Open Interest below is a good site that shows dailiy volume and OI (Open Interest) across several strike prices and months. tradepbs.com ( Note: Enter the Novel stock symbol then Click on "Options". A montage of options quotations will be returned for that particular security.) Notice the changes in OI over time (both daily and weekly)... <HINT watch strike prices and month's where the OI is expanding!> My observations of the preminums based on the CEO announcement is that the "Leaps" '98 and '99 have expanded more than normal. This leads me to believe that the smart money is betting that indeed a turnaround will occur but not until middle or late 1998. I would like additional thoughts and strategies as it appears that for a conservative approach an additinal 10% can be earned on our "dead" money while we wait for this turnaround to happen. EKS

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