Mike:
I appreciate the time you give to this thread. You make a cogent arguement against WCOM and no doubt it seems overpriced. As I consider put candidates, however, I must look for more than the obviously overpriced ones. There has to be a catalyst that will drive it down. For example, micron is waay overpriced. (especially after you adjust its capitilzation and sales for its muei subsiderary.) Yet, we have been calling for a while for its demise. Yes it is down from its peak, & no I am not defending it, but the catalyst will be when they have to scale back operations from a lack of cash. (imho)
Consider AMZN, a company in a very low margin business with a small amount of sales, no barrier to entry and much bigger competitors who will be coming straight at them. They don't make money have negative cash flow, arent expected to make money for years yet they trade at a market cap of >2 billion. Sales of 140million. They have a P/S ratio that would seem to say monopoly margins yet they are in a low margin business. My question is why don't you buy puts on AMZN ? or for that matter, AOL or YHOO ? They seem much more overpriced than the WCOM's
My questions are aimed at trying to learn. I know you have a good track record in the option departement, I am just trying to figure principles.
Thanks |
