Magnetism = options market
That big fat open interest of calls at 17.50
 Cohu, Inc. (NASDAQ:COHU) Director James A. Donahue sold 75,000 shares of the firm’s stock in a transaction that occurred on Wednesday, August 2nd. The stock was sold at an average price of $17.87, for a total transaction of $1,340,250.00. Following the completion of the sale, the director now owns 444,049 shares in the company, valued at approximately $7,935,155.63. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at this hyperlink.
The CEO just provided the shares to the market maker.
Donahue has done a great job setting up Cohu for long term profitability - too bad he doesn't read this thread.
He should have expected 17.50 not feared it.
So it looks like we have an zig A wave down to $15.55 with a B wave up to $20.27 now a zag C wave down (should be 5 waves ,but can truncate).
A wave was down $6.09 ($21.64 - $15.55)
If A = C ($20.27 - $6.09 = $14.18 for a target.
So here's the plan.
Sell $15.00 puts as far out as can be written - if it does get to 14.18 - it will be 82 cents in the money plus a premium of around 1.50 or a total premium of $2.32 = a net purchase price of $12.68.
That's my load the truck up target - sell puts and buy the stock in the low 14's probably in equal parts.
That would average a $13.43 if you did get the puts assigned.
Amazingly the 75 % retrace number of the last impulsive wave up ( 21.64 - 10.72) = $13.45.
AMAZING COINCIDENCE: screencast.com
I THINK WE'LL WATCH FUTURE PUT OPEN INTEREST FOE A BIG SALE OF 15.00 PUTS AND THEN A SCALED BUY OF CALLS IN THE 15.00,17.50 TO 20.00.
As Cohu takes a year to grow consumables (hopefully another acquisition) and wafer level chip scale packaging towards their Cohu 500 goal, this last C wave (ZAG) will provide a great last opportunity to buy Cohu in the low teens before we go into the fast price mark up stage - which will coincidentally boost earnings over $1.75 and include another two for one split.
So it is written - so it will be.
Remember where you heard it first.<smile>
Bob |
