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Technology Stocks : XM Satellite Radio Holdings Inc. (XMSR) -- Ignore unavailable to you. Want to Upgrade?

To: billcasto who wrote (1700)	1/24/2005 8:09:46 AM
From: Michael Hart	Read Replies (2) \| Respond to of 3386

Hi Bill, Hope you had a great weekend. <What you are saying is monday sell covered calls on any existing XM longs, wait until the stock gets hit on Wed. with SIRI earnings report, then get near the bottom and go long again. There will be a run up in the price next week with the anticipation of XM's earning. Sell into that anticipation or protect with shorts or covered calls again.> Yes, I'm saying be hedged by something, covered calls, buy puts or sell the stock outright prior to SIRI's earnings. Monday or Tuesday is fine tunig depending on market conditions. I will say that the premiums may sneak up going into Wed. on the call and put options. Be prepared to get into either SIRI or XMSR after the SIRI earnings for either of two reasons. One would be just a bounce play for a quick intraday trade if SIRI gets hard and well into the $4 range. A sell would be arounf $5 and up to about $5,25 if it breaks through $5 on the bounce. Of course you probbaly should be sitting at your trade station in order to do this. The second is a buy of XMSR for longer term(few days) trade with a bounce and a runup into earnings. the lowest I'd expect to pick up XMSR is the $31.50 resistance. More likely and a safer trade is to let XMSR bottom.......maybe $31.50ish and than buy it on a break of $32 on the way back up. Immediatly set stops at the bottom in case it retraces and breaks. An exit or protection of XMSR is very depndant on the PPS prior to earnings. $35 or under it's less liekly to get hit on their earnings......$37.5 more need for protection......$40ish and above...........even more...... As I'm sure you know this is just a scenerio. It may or may not happen this way. The real point is. I think there is significant risk to the SIRI earnings to both companies. Investing for a living is about risk vs reward. Managing the risk is how we keep our heads about us and not get caught in dramatic downturns of an equity. <I am somewhat new to all out trading but what I have done this year has made me money. I am beginning to think that with the market the way it is and the probability that it will stay that way it will the only way to make money into the near future.> My assesment is that buy and hold is not how to make the most of ones portfolio. trading is....BUT......not trading for trading sakes......It is very dependant on how much time you have to put into it. If you can only assess and make vhanges in the off market hours than Swing(multiday to multi week) trades are where one should be focused using but & sell stops to automatically trade your positions during the day. Intraday trades should only be made by those that can be at their tradestations during trading hours. If one has very little time for researching specific companies thn they should at least be able to track and trade an index..nasdaq(QQQQ), S&P(SPY) etc.. <One question, on covered calls, if by chance it was a bad call and the stock went up significantly, is there any way to buy back those covered calls or are you just stuck with them> First, I do not consider getting called a bad thing if you know what is going to happen and you get called because the stock goes up. You can get very trapped to the downside however if the PPS goes beyong the income you take in for protection. You should be able to get $1.50 to $1,80 for XM Feb. $35's today if the stock is between 34 and 35. Just the call premium is about 5% for 4 weeks...60% annualizied. I know you may be in the stock from higher but that should NOT be how you trade the stock today. In answer to your question though, you can get out of the call by buying it back. If the PPS goes higher than the call strike you will (in general) have to pay a premium for it nad will lose money on the call in order to uncover on the upside. If the stock crumbles.....you can also get out of the call by buying it back........making money on the call and uncovering the stock. It sounds like you may not know enough about options to be trading them yet. But that's up to you of course. Good luck, again my take is just a scenerio to make trades against.....it could change at any momnent based on market and specific company events. Sorry for typos......gotta go...no time to spellcheck... Be well and good luck with your trades, Mike