Bob, first of all I didn't show up here to say "I told you so" or anything close. All I came here to say was that, "while it's risky being long YHOO, it's even riskier being short."
Yes, I have a position in YHOO and have for a long time. Just today, however, I sold all of my shares and rotated them 1:1 into April 90 calls. This is partly to cover downside in case the stock blows up this week (I lose less because there is a floor in what I paid for the calls and because options premium will expand somewhat if the stock goes down; meaning that if the stock drops 8 points from here, my calls will only drop perhaps 5). But I primarily plan to use it as leverage--I'm going to use some of the money to buy more calls ahead of earnings because I think the stock will run (I'm anticipating a split announcement). Interestingly, YHOO has gone down after earnings the last two quarters and everybody expects it to do the same after Wednesday--I'm expecting the opposite, and I believe Bill is too.
Also, what I did with the options is a tactic to reduce margin.
Actually, I'll be writing an article explaining this type of options strategy soon for Microsoft Investor (http://www.investor.com).
As for sell discipline: basically, I'm not interested in trying to pick the top (or a bottom, for that matter). I'll sell it when (after) it's clear that the stock won't be going up (read: stay flat or go down). Note that I don't think valuation is a factor, at least not in the sense that you guys think of it. YHOO won't go down until some bad news comes out directly from the company. |
