Lu recently broke the $60 barrier... and yes, it has gone flat...
The last time they called away my shares, (at $55), after the split, I noticed that the premiums have gone much lower, which means less volatility....
That stop me from re-entering, together with the fact that SCH and EGRP, (and others), have really great premiums...
I can only think of two items that may give you the answer....
1. Stock Splits are definitively a factor, NOT because the split in itself increases the value of the stock, but there is a PERCEIVED notion that it does, because "it makes the price more attractive". i.e. lower, "easier to buy".
I personally do not believe that the stock becomes more valuable for said split itself.
However... the PERCEPTION that it does, fuels demand for the stock, rising the price, and it also, creates great price swings, as some current holders find it profitable to sell... therefore, volatility seems to increase...
2. Currently, the fear that interest rates may be increased, (not to mention that overall... stocks has risen rather rapidly), put a degree of "fear" to hold, hence a selling pressure originates...
Again, personally, I think that these "brakes", "pull backs" etc... are indeed healthy, as it releases some selling pressure.
As far as contract announcements, as you point out, in Lucent's case, they need to be considerable, so for those alone to "move" the stock, may not be sufficient...
I guess, the best way to view it is that for the time being the outlook seems to be riskier than at other times.... This is where T/A could help, but no guarantee....
In the case of SCH, EGRP, and the Internuts... it is mere tremendous demand for such stocks based on "expectations"... in some cases, a little exaggerated... (AMZN, for example).
Once again, considerations of balancing a risk/reward scenario are most important... don't ask me how to "measure" such... better minds have tried it and it all boils down to one's tolerance to see a particular stock go to the depths of hell, and say... "what, me worried?"
At the same time, the investment decision has to be in a company that it is not going to go bankrupt next month....
The final point is, one needs to be in touch with the market to see, when the particular stock is about to become volatile, and learn its rhythm.
In LU's case.... it served me well, from December through April-May... I let the options, to a degree, dictate where I go....
For now... SCH, possibly EGRP, and others.... (but who knows... I may take a break and not re-enter for a while....) |
