It seems that at this stage, I am going to have to wait till the 19th hoping for a blowout and split announcement unless I can come out on the 18th before the announcement with say a more reasonable loss... Waiting until after earnings are reported is when you are going to suffer your greatest loss. You don't understand how options work. Even if Dell goes up several points, the value of your calls are going to decline, because demand will suddenly drop. Also, Dell isn't going to rise much, even if they do have a great earnings report and even if they announce a stock split. I know most people disagree with this, but history shows that stocks don't increase in value just because of splits. In fact, if you look at a chart of Dell, I believe in 1995, Dell had a stock split in late October. It went up a couple of dollars during the beginning of November (not unusual, since stocks do tend to go up at the beginning of the month), and then it declined more than 50% to reach a p/e of 7! Splits help a little in an up market, but will not increase stock prices in a down market.
IMO, the best time for you to sell is Tuesday morning, BEFORE the earnings report, while you still have significant premium. Otherwise, you're going to suffer a greater loss. While you and others here may disagree, we only have to wait 3 more trading days to see who's right. Good Luck! |
