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Technology Stocks : JDS Uniphase (JDSU) -- Ignore unavailable to you. Want to Upgrade?

To: voop who wrote (3572)	1/1/2000 4:54:00 PM
From: Guy Gordon	Read Replies (1) \| Respond to of 24042

voop: When a stock breaks out the top of its channel, there are three common occurrences. 1. Sometimes it's a fake-out and the stock falls back within a week. This does not happen too often, and I never expected it of JDSU. 2. Next more likely, the stock will form a new channel laying on top of the old channel (at the same slope.) This indicates that investors have assigned the stock a new evaluation with the same growth rate. 3. Most likely, a breakout signals a new, steeper channel. This means that investors have new growth expectations for the company. This is what has happened to JDSU. When JDSU broke out, I suspected it was going to do #2. I bought puts to protect against the downside and paid for them by selling covered calls (creating a "fence".) If you think about it visually, you'll see that the fence matches my expectation of a new channel laying on top of the old. I held the fence until options expiration day. I was in the black until the very last day. Then JDSU jumped and I bought back my calls mid-day for a loss. No, I have not sold any shares.