Hi Peter, E-One... A plausible Option Strategy for Tomorrow. I have
noticed that if the street is uncertain about an earnings report
the stock will fall slightly the day before release of the numbers.
STK traded down all day and reported good earnings after the close.
For today I totalled up the number of UTEK option contacts for
August. Combining the calls for the 221/2, 25's and the 30's the total
was 44 contracts. The number of Puts for the same strikes was l9. It
may only mean that more people are optimistic than pessimistic concerning
UTEK's earnings.
I dont't know how extensive your knowledge of Options is so I'll
give you my analysis of two choices. The Nov. 22 1/2, and the Nov. 30's.
UQTKF Nov.30, closing price 1 3/4 by 2.
UQTKX Nov. 22 1/2, closing price 5 by 5 3/8.
If by the third Friday of Nov. UTEK closes at 35 the 22 1/2 will be
worth 12 1/2. The Nov. 30's will be worth 5 . If UTEK closes at
32 the 22 1/2's will be an easy double. The 30's will be dead money.
UTEK closed today at 25. It would have to rise 40 percent to reach 35.
My question is, "How often has UTEK risen 40 percent in four months?"
My point is, if you are sure that UTEK will be above 35 by the end of
Nov. go for the 30's. But if you want a slam dunk do the 22 1/2.
The cheapest option is often the most expensive one. My other concern
is that Wall Street is not in love with UTEK like thay are with Novellus
and AMAT and KLAC. Even if UTEK beats the estmates for earnings it
may only give UTEK a modest pop in the comming weeks.
My preference is to buy options only on terribly down days. Like when
The DOW is down a hundred, NASDAQ is down l5 and the .SOXX is down
eight or more.
If I were to buy UTEK options tomorrow I would put in a linit order
in for the 30's at 1 3/4 or the 22 1/2's at 5. If UTEK drops you have
a good chance on getting filled on either. If the market runs up at the
open, do nothing, reverses of 100 points by noon are common.If you
don't get filled, there is always another day and another strategy.
My previous post mentions a book by Max G Ansbacher, "The New
Options Market" read it and earn. No need to settle for a 50 per cent
sucess rate. Sixty to sixty-five percent is doable. Cost about l5
dollars. Your local book store can order it for you.
I still have losses and will continue to do so. Last Month I lost
on SEG, the month before that on IFMX, but it did not affect my portfolio's
performance.
Relax Peter, Life was meant to be simple, drink good whiskey, enjoy
the company of your friends, and never get involved with a woman
that is smarter than you.
Sincerely, Jerome
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