Ok! For starters, if you need this money to pay the rent, buy a new car, or pay for open heart surgery then wait for the bounce tomorrow and cash out your 500 shares at around $15.50 per share. That's a $2,600+- loss and you can reinvest and recover in another company! If you can't sleep at night follow the same advice. That may sound cold, but $2,600 is not impossible to recover within two months time!
VVUS is not dead and still has 8 lives! The stock is selling at a -58% discount at $14 with a P/E of 11.6 vs. 27.9 for the industry. Even with a loss this 4th quarter (FY97) bringing it down to .23 cents it beats the same quarter in FY96 of -.29 cents. With that said, the sky is not falling. It's raining damm hard.
Here are some choices to consider:
The Wait and See Approach!
1. Buy more shares to average down your cost and write CCs at the highest price you can obtain for the following strike prices.
You net cost basis is $20.70+-. So, if you sold the VVUS March 20 Calls @ 1 1/2 you would pickup 1.5 x 5 = $750.00 now and if called out at $20 another $10,000 for a total of $10,750.
If the stock recovered you would buy back your CCs at a loss and hope to roll up another few strike prices! The cost should be less than the current $2,600 lost. Again, if you picked up more shares to averag down you will earn more for the CCs and perhaps shorten the breakeven point.
Ride Em Cowboy Approach!
2. Sell (write) 5 contracts for the March 17 1/2s Calls @ 2 1/4+ when VVUS bounces up to $16.00 and wait for VVUS to float down to $14.00 again to cover and lock in 1 point for the thrill. That would lower your nut to $19.70+-. This process can be repeated a number of times to work that nut down!
Give Me Shelter Approach:
3. Same as #1 but use the money to buy VVUS PUTs two strike prices down and one month out! You basically are covering your bases and would eventually drop the PUTs when VVUS settles down! With the options expirations coming up next week, it should be interesting how VVUS moves. I would guess around the $17 1/2 strike price. 2,444 Dec. 15s Call contracts traded today!
More MUSE For The Huner!
Why settle for a floppy drive, when you can have a "HARD DRIVE?" Same as #1 but use ALL THE premie money to buy those Dec. 15 CALLs @ 1/2. A 1/4 point profit x 40 contracts will earn you $1,000 profit and potential working capital. What does everyone think?
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