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Strategies & Market Trends : Technical analysis for shorts & longs
SPY 694.04+0.7%Jan 9 4:00 PM EST
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To: Warren Gates who wrote (9606)11/16/1996 1:30:00 PM
From: Judy   of 69647
 
Hello, Warren re: "the potential of Zitel going down is so astronomical"

You make very valid points about ZITL ... but the potential of Zitel going up is also astronomical. The yr2k stocks are story stocks and somewhere buried on the SI threads are my thoughts on story stocks. Trade/invest in them while the story is unfolding and the romance is alive and before the pitfalls are known. Witness how high DNA and IOM soared before reality and ridiculous valuations bought them back to earth. No point missing the ride up while one is waiting for the ride down.

The other day Clint asked my about buying puts for ZITL and we chatted via email yesterday. I'll post here for everyone who has an interest.

Good trading to everyone, play it up ... play it down.

*******************

Clint, on ZTEL ... you got to know the story.

Very thin-float and 22 percent of available float was shorted. Shorts started covering when the stock broke 42.5 ... about 1 day worth of short interest. Still at least two trading days left. 1 day of short interest took it from 42+ to 50+ with no beta test result or split.

Today the ZTEL had to close between strike 40 and 45 so that almost all puts and calls would expire worthless. When the stock broke thru 35 everyone bought calls at high prems, and when it starting tanking in the 40's, everyone bought puts at high prems. Notice the stock traversed the range from 32 to 50 in the last ten days so that all weak hands and options were wiped out. I do not believe that the Wall Street Journal's article was a coincidence. Of all days to come out ... on an options expirations Friday. Come on!

Now let the dust settle after options expirations. Let the stock split and watch it. The beta test results and some contract should be announced soon to rescue the stock. Everyone will play this. Remember VIAS ran up more than 20 points after it split.

Now before you buy puts, look at how expensive they are. You must buy at-the-money or in-the money puts at the right point to do well. If you normally short stocks, then why don't you consider SELLING naked in-the-money calls?? No need to reserve shares for shorting, no need for uptick rule, etc.
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