Djoo,
FWIW, I have neither sold a share nor hedged any of my position by writing calls against it, for example, during this rise. (I have enough gains for 1999 via Netegrity and some others, my margin debt is modest in view of my total positions, and I own only 3% of my position in options - those being June 2000 $ 5 calls for which I paid < $ 4.00.)
Frankly, I expected the stock to consolidate a bit (in the absence of any news) when it hit the $ 20 level, which was roughly 3x its 30 week moving average. And it has, moving off about 20% - 25% or so.
But I didn't sell or hedge any of my position because I expect that the first two contracts have caused other OEMs to sit up and take notice - and accelerate their own purchase decisions. My understanding is that this is now taking place, and orders are by no means a problem. Also understand that NI is now running 3 shifts/day, and yields are fine.
I would not be surprised to see at least one additional contract per month for the next several months - including contracts for laptop and PDA batteries. I stated on an earlier post that I expected that the short sellers had until early January before they really were trapped in a losing situation. Well, some of the rise came earlier and was more sudden that I expected. And I am quite curious to see the next month's short interest - because I have the feeling that it won't have declined much from the 1.5 mm share level. There will have been some covering, of course - we saw some of that this week. But I also expect the "Valence Haters" to continue to try and short above $ 15.00 in the hopes of driving the price back down to lower double digits, where they can cover with modest losses. So short sellers have to be making further bets on the time cycle for the next orders. I continue to believe these orders will surprise them both as to their timing (pretty soon now,) their diversity (not just cellphone orders), and their size (larger than anything announced to date.)
So I am uncomfortable in trying to trade small portions of my position for $ 4 - $ 5/share. Never been good at that.
If Valence is as good as I believe it will prove to be, then someday these "small fluctuations of several $" will prove to be minor blips.
Long, very comfortable, and looking to add to my position next week. |
