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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: rudedog who wrote (69452)	10/22/1999 6:07:00 AM
From: Steve Lee	Read Replies (2) \| Respond to of 97611

I may be wrong about the short term stock price movement - but I am covered. I have no short stock position, just an equal number of nov20 calls and nov20 puts. If your nov22.5 go half a dollar into the money, I will be in profit on the calls enough to outweigh the entire cost of the puts. I paid 1 1/2 and 1 3/8 so I only need to sell either for 2 7/8 to break even. I won't be laughing either way, I'm not interested in that - I'll be banking my profit or cutting my loss. If you want to share the reasons you are optimistic about Compaq, I'm more than happy to listen. I know the company well, spend time at their facilities and think they have great products. In fact I am just taking delivery of an order of $2 million of ProLiants for our new datacentre - I actually chose to buy that stuff and think it is ideal for our needs. I just don't think people have been buying their products in high enough quantities and at high enough margins for them to grow earnings at a rate needed to justify their multiple - especially the desktops. However I am mainly seeing the European side of things and welcome your input if you know anything else. That's the fundamentals. I've been waiting for the technicals to tell me when the stock is going to break and the repeated testing of support last week told me that it is going to make a move up or down very soon. I think yesterday's action indicates that move will be down. I will close my puts if the stock gets to 15. Hey, if we then get great earnings and go to 25, I'll make on the calls too but I don't think that will happen. You may do well with your calls. They were pretty cheap (assuming you bought them recently) and you stand to make a lot of money if they rise. I wouldn't have bought 1000 contracts of anything but maybe you are a lot wealthier than me. I agree about buying low but when it dropped to 30 you could have used that argument, or at 25. If you are trading it in a channel, then that channel has just been broken. It would have made sense to buy each time it approached 20 1/2 in anticipation of a bounce off support, but this time it didn't bounce so with that strategy, I would have closed out yesterday at 19. The small loss would have been outweighed by all the times it has bounced off 20. I think we are in a new channel with 20 at the top and maybe 15 at the bottom, so yes, buy low at 15 and sell high at 20.