Mang, what's dangerous is holding Dec. expiry options, which is what I was holding. This is as close to expiry as I ever like to get, and actually I usually like to be out after the first week of the expiry month. I don't know if you do options, but the last two weeks is when the premium gets very volatile, sometimes disappearing, then reappearing. This is because option MMs are gauging which way the stock will head, and if they decide that a certain direction is unlikely, the premium drops real fast. So I also try to make my decision early, and get out while there is still a time premium - not to mention I don't like to have guessed the direction wrong and wind up losing 100%. I'd rather make the decision soon enough, and "cut the loss" and get out while there's still money on the table for the taking.
You're right in that I'm normally playing the long side of stocks, rather than the short side. However, going short or going long is essentially the same thing - Both cases you have to decide at what point to buy and what point to sell. It's just that when shorting, the sell decision comes first.
Where I misjudged 3Com was in the announcement of the 56K standard. Ever since the failed attempt to come to a decision in Sept, I took it for granted that there would be a standard announced in Jan 98. The main reason I made this asssumption is the same reason the modem vendors tried real hard to come to a consensus - Another delay would have been the death of 56K sales momentum. The negative publicity about the lack of a standard has been unrelenting. Therefore, it did surprise me that the financial media would get so worked up over the fact that it looks like the ITU will be able to announce a standard in Jan. 98. IMO, the only way there could not have been a compromise is if for some bizarre reason Rockwell and 3Com had lost all sense of what's good for business. The financial media has a way of distorting and hyping news - whether the news be good or bad.
The "up channel" may be intact in COMS - But stock strength usually does take a while to weaken. In my case, I realized that if COMS is strong enough to weather this latest bout of "Asian contagion", then the stock will likely not plummet to $30 before Dec. expiration.
Life (and investing/trading) goes on.
DK |
