Crossy, if you are looking at SCMR for a long term play, I would not advise it, even if it does not go much below $13, it will have to base. Frankly, I believe it will be available in the next 6 months under $10 which is about twice book, and even there it will be at a 30 PE of the expected earning a full 18 months down the road. If your interest is a short term play, it could bounce to the $18 area in the next six week, a nice 50% PLay, though risky. A sfaer play would be to buy it here at around $13 and sell the Jan 2002 $25 call (covered of course) for $3.5. If it recovers you have yourself a 2.5 bagger in 10 months (your cost is only $10). If it does not, you have a cost basis of $10, which you may consider "onlly 33 times 2002 earnings. A more risky play, would be to assume (meaning making an ass of you and me), that indeed the turnips are right and we are going to have a rally, then when SCMR gets to $18 and everyone is so exuberant again, sell the $30 calls (Jan 2002), for probably $5 bucks, reducing your cost to $8 and if it gets to $30 by 2002, hey, it is close to a four bagger...
Zeev |
