I don't think it would be wise to buy any options now. Dell Aug options are too expensive for the risk and meager potential. That Dell didn't make it above 110 today or yesterday, when other stocks were doing well doesn't bode well for Dell. Maybe the market has finally decided that it's overpriced.
I think Dell will have a hard time making it to 115 before earnings. After earnings, it will probably decline along with the rest of the stocks. Remember, too, call holders, Dell options are going to lose a lot of value right after earnings are reported because of decreased demand and volatility. I think most Dell call holders, unless they bought a while ago, are going to lose.
I think the market will decline thereafter to a low right before Labor Day weekend. That would be the best time to buy Sept options. Keep in mind, too, that historically, September is the worst month for stocks, although some Septembers have been good for computer stocks.
And I repeat that I think the market is going to decline considerably in October. If you look at a graph of Dell last year, you will see that it didn't do anything between the end of July and mid-January, and I think the same thing is going to happen again.
Caveat Emptor! |
