Mike,
I've done alot of option work with EMC, but I must admit we've undergone (or are undergoing) a change of stripes since the easy money days in 1998 when you could (and I did) write puts every month and take easy money off the table.
Now, in this new phase, it's going to be a little harder to find the ranges and patterns. We've got the cyclical "thing" to deal with, and the long bond is creeping up (especially today).
On the run a few weeks ago from 100 to 117, I was short the 100 puts at 4 7/8, and covered at 7/8 when the stock was at 116. Then I wrote the 135 calls, and they are still naked short. And I re-initiated the short puts, but higher up. I now am short the 110 puts for May, and still short the 135 calls, too.
I really do think it will close over 110 and below 135. In my strategy last year, I was called 5 out of the 9 times I wrote covered calls last year. It really didn't matter where I sold the calls, EMC came up to meet my strike. It was tough on the CC side, but easier on the PUT side, except around the late 98 summer and our deep trough.
I think going forward that EMC will NOT exhibit the very aggressive upside we saw in the last year to 18 months. It will be more up and down, jagged movement. It's hopefully great for trading, but I continue to be reminded of Space Cadet's post, which rang true, at least for me.
I think 150 is topside max this year, pre-split. Unless we allow valuations to continue to rise into the bubble, we may grow, but not at the mega-torrid rate we got used to last year.
It is possible that tighter/lower call strikes will work, but I left myself a wide berth for now, until the new range makes itself apparent. In the transition, it still deserves a wide berth, just for safety.
JMHO.
Steve |
