Hi Russ,
I have two observations. First, FORE has dropped below it's 50-day
moving average before. At that point, yes, FORE seems to continue
further downward before it corrects off the lower BB. If that is the
case again, then you need to load up on cheap PUTs and hedge. Second,
there is a great deal of insider selling lately even with the EPS
upgrade $.63 this week on July 29, 1998. Now, that may be nothing
more then taking dollars off the table for some personal goodies and
may account for some of the weekness in price. Weakness is weakness,
so you should prepare for any storm. You see clouds, you get your
umbrella, just in case. Right? Notice below tha short interest is
starting to build up. Hence, an increase in the float liquidity.
Supply and demand dictates: higher supply (more shorted shares) of
shares with dropping demand (lower RSI) means lower stock price until
the fish bite again!
Second, FORE does offer LEAPs. You would be better off owning the
FORE 10 LEAPs for the year 2000. For the amount of dollars invested
in the stock ($24 x 400 = $9,600) you could own 8 LEAPs for the 15
Jan. 2000 @ 1,150 each or $9,200. You then could write 8 CCs against
your LEAPs at a strike price higher than $15 (strike)+ $11.5 (LEAP)=
$26.50. Of course, you would have to have a lower net cost basis to
make the number work out better. But, check this out! You could write
8 CCs for the Jan. 25s at 3 right now! That is 3 x 8 =$2,400 in CC
premies in your pocket. That would lower your net cost basis to $26.5-
3.00=$23.50 on the first round of LEAP/CCs. That is a much better
rate of return for you! Get the picture?
PS - Use the rest of our CCing Toolbox strategies and you are sitting
pretty. In fact, I like what I see in FORE and will put it on my
potential buy list after I milk this next FORE cycle. Thanks for your
question.
SYMBOL STRIKE LAST BID ASK OPEN INTEREST
LFYAB/MB 10 Jan00 16 5/8 .. 14 5/8 15 3/8 .. 341
LFYAC/MC 15 Jan00 11 1/2 -2 1/4 11 11 3/4 .. 1,225
LFYAD/MD 20 Jan00 9 3/8 -1/2 8 1/4 8 1/2 .. 4,306
bigcharts.com
FLOAT TURNOVER
Thanks to Doug's programming skills we have a new float calculator.
Very nice information: Check it out at
webbindustries.com . 32 days to turnover float
(TRO) is a moderate moving stock. You need to monitor this stock.
The TRO will give you an idea of how long it may take for the stock
price to cycle and eventually bounce from BB to BB. This is something
I'm starting to research. In the meantime, I do know that given two
stocks with different TRO, the stock with the lower TRO (less days to
turnover) is a fast moving stock. Example, VVUS is a FAST VIPER stock
at only 13.33 days. If you don't have the nerves and risk tolerance
for VVUS, DON'T TRADE THAT STOCK! If could be a danger to your
working capital!
FORE Systems, Inc. Nasdaq:FORE July 30, 1998
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Float: 73500000 shares; Daily Volume: 2290000 shares/day;
Turnover Rate: 32.10 Days
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Industry: Computer Networks ; Capitalization: $2580000000;
Shares Outstanding: 100800000
P/E VALUE
NASDAQ: (FORE : $23 13/16) $2,344 million Market Cap at July 31, 1998
Trades at a 23% Discount PE Multiple of 37.8 X, vs. the 48.9 X
average multiple at which the Networking SubIndustry is priced.
INSIDER TRADING
biz.yahoo.com
SHORT INTEREST
Ticker Month Shares Short Avg Daily Volume Ratio* Remark
FORE
07/98 3,611,405 2,351,153 1.54
06/98 2,859,590 2,151,626 1.33
05/98 2,604,760 3,289,836 0.79
04/98 2,904,996 2,279,131 1.27
03/98 1,847,409 1,865,837 0.99
02/98 2,993,972 3,183,762 0.94
* Ratio = Shares Short / Avg Daily Volume;
it may be used as a rough measure of days to cover. |
