CMGI is a long-term core holding for me.
But the volatility has me (and perhaps a few other threaders flummoxed). That's good and bad. Good, because the high volatility increases the amount of premium for which call options can be sold. Bad, because once you hedge the position, if CMGI goes to 230 at expiration, I'm hedged out of my position.
In any event, I sold a pile of the March 190 calls between 47 and 51, and the March 210 calls between 21 and 24 against my stock in a one-to-one ratio.
Will I regret it? Of course, if the stock continues its meteoric rise through expiration. Will I benefit from it? Well, if the stock gets called away, what I make on this trade will be more than I lost in the crash of 1987 (a very bad day...). If the stock goes down, well, it's a long-term core holding, right?
Nothing like rationalizing our trades, eh? Hope this helps us all sleep at night.
Best regards and good investing,
Mark A. Peterson |
