steve, I am not sure I agree with your recommendation to buy puts. In general the premium on options rises with uncertainty, and tomorrow the situation will be about as uncertain as it can get. Thus even as the stock falls, the premium could drop, and the puts could drop in value, or simply not go up. I would rather see someone sell short in the AM than buy puts. It would probably be even better to sell calls. The calls should also carry a larger than normal premium due to uncertainty, and if the stock falls, the calls will fall even faster.
Did they give any guidance for the fourth quarter today? Do you think they are deliberately deferring order shipments from today into Q4 so that making estimates in Q4 would be easy? Perhaps they are taking a "big bath" on the sales side on purpose so that they will look good going forward. I hope so.
I sold the shares that I bought at 32 15/16 and the shares that I had bought at 40 at about 16 1/2 based on my assumption that we would re-test the low. I am still short puts, however, so I expect to take a beating tomorrow. I sold March 60's for about 20, so I need the stock to get back to about 39 by March to come out OK (after figuring in interest on the cash received). Thus my position is not too different from yours. Frankly, I am not too concrned about it, and am prepared to average down if and when I determe that the stock has bottomed.
Good luck,
Carl |
