Todd,
I'm about 6 months ahead of you in options (i.e., I'm somewhere between novice and intermediate). I've done short-term CMGI plays three times, all successful (defined as profit > 100%). Granted, it's easy to seem like a genius in a bull market, so don't assume that my success says anything other than that I've been lucky.
I've noticed that CMGI seems to lag big-name Internet stocks (AMZN, YHOO) by a half-day. So, given the hysteria lately in the Internet sector, I've found it profitable to wait until CMGI is clearly being beaten down by hard selling (as it was last week when it closed at 66), and then use as a signal another 10-20 point daily gain in AMZN or YHOO. So far, I've noticed that in these cases CMGI has responded a few hours later by rising enough to make a $2-4 short-term call option cross over into the $4-8 range. Then if you have the guts to stay in past that (which I haven't had), you may very well get up into the stratospheric $10-$20 range if the sector keeps going crazy for a few days.
But be sure you won't mind it if you never see your $2,000 again. Otherwise, as you know, you shouldn't be playing around with options. All it takes is a small misjudgment in the market (as almost happened to me when I bought December CMGI 80 calls a few weeks ago, lost 85% of their value, and only through dumb luck held them through this week's earnings/split announcements to score a $4/share profit) to lose everything. |
