Hello Dennis. I agree with you about the spread, have to watch those guys! Besides the obvious quick windfall profits they get from those who choose to sell their stock at inordinately low bid prices, I think MMs gap the spread downward to shake out weakholders. Otherwise, typical limit orders both ways will probably fish somewhere in between. In fact with spread at 3/8, MM psychology may be to lure the higher "fishing" sellers into selling "just" above, thus more volume for them at 1/4 spread which ain't too shabby on volume.
I'm not necessarily expecting terrific eps announcements for q4/96 and my investment allocation strategies for OREX are longer term (based on info that is publicly available today). In retrospect, for "trading" portfolio management, there are several alternatives for good percentage returns to those who invested between 6 and 7. In hind-sight, there have been multiple opportunities for successfully trading OREX in the past few months.
As I've posted previously, some hedging techniques to consider might be writing covered calls. When OREX was 8.25 a day or so back, I wrote some in the money 7.5s and some out of the money 10s, all expiring in February (and unfortunately after eps announcement is expected). Because of statements made by management (in a PR that I read), I'm believing their "modest" earnings predictions, whatever that is? My guess is a penny or two. The big question is what investors' perceptions of eps growth rates "will be", and thus the resulting p/e market multiples going forward will probably be related to such expectations. Big unknowns, that's why I'm hedging both ways at the moment to hopefully capitalize on any small volatility that favors my position, but my long-term position in the stock remains a hold. Just my scenario, and short-term movements are unpredictable.
As the old saying goes: "you never go broke taking a profit...". I'm just not sure that's true without some quantification of required profit levels to suffice. Obviously, the real goal is to create wealth without going broke in the attempt. Like you, I think current market value support for OREX is ~$6. Not unlike other issues, there are certainly opportunities to trade short-term for 5-30% in the interim or simply choose another "horse" to ride.
Hope this response doesn't sound too incoherent. Should have taken me maybe 15 minutes; but with numerous interruptions, it has been about 1.5 hours, and no time to edit. Regards-Kent
|
