HPQ ($24.49) hasn't sold below $19 in over seven years. They have 15-strike puts expiring in January currently quoted at $41 bid, $45 asked. If sold at my brokerage using cash as collateral, the nominal ten-month return would be 20.7% and probably more like 23 or 24% with an early out. Do you realize that you wouldn't even earn that much on AAPL if that one goes from $585 to $700? And which do you suppose is more likely - AAPL getting all the way to $700 by January expiry or HPQ merely being able to hold on to the margin-safe price of $16.90?
I very much do consider it to be a travesty when a company like HPQ which is expected to earn $3.50 a year in its trough year sells at just FOUR times earnings. What other company do you know of not headed for bankruptcy sells at that kind of PE? Even Tyco at its worst never sold at the PE that HPQ now sells at.
I love to be involved in stocks that are just hated by the Street when valuations are this absurd. Because unless the stock is destined to plummet a lot further, I will make out like a bandit in the fullness of time even if I have to roll a time or two.
"And which do you suppose is more likely - AAPL getting all the way to $700 by January expiry or HPQ merely being able to hold on to the margin-safe price of $16.90?"
and the answer is:
aapl got to 700 in sept and hpq went below 16.90 in oct.
when PINOCCHIO made his STUPID statement aapl was only around 585 and hpq was around 24.
in that same msg he also said:
"Investors will really be chortling if AAPL should near $700 within the next year while I quietly go about the business of earning even a higher percentage which would occur even if the stock were to lose nearly a third of its value from here."