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GameStop Corp. Message Board

  • gotta_do_better_then_that gotta_do_better_then_that Jan 25, 2008 2:34 PM Flag

    Down $2.30 on very light volume

    What does that suggest?

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    • matt-
      The shld strangle worked out ok. I made 10% in 1 day on the overall price and still have 1 side open ( I sold the call for 10% more than the entire cost of the strangle and still have the put open). Adding on to my previous post in this thread where I talked about deep ITM calls: The atvi Jan $15's for $11.50 look nice to me. However, for approximately $1.0 more you get an extra yr of time value by going out to 2010. That seems like a descent trade off "IMO"...

      I like AAPL quite a bit at $125-130.

      GITA!!!

    • The upgrade just occurred. Talked to EMC techs and CSCO techs doing the upgrade. Both comapnies are so busy they can't keep up with demand at least in North Carolina. That helped offset some of my disulsionment with CSCO. Short term I don't know. CSCO CEO is not one to instill confidence. The last qrt CSCO had blow out numbers a good CEO could have managed the CC better and the stock would be at 35.00 today instead of 24.00 on those numbers even with the selloff. EMC I am also looking at. The selloff has been extreme. Companies are hitting walls with technology. This is not something companies can scale back on during hard times. They either upgrade or die from lack of sales, customer retention. The last major upgrade cycle was 8 years ago. The systems have been pushed to their limits and are failing.

      So yes short term no confidence, the next two years during a major upgrade cycle then yes I have confidence in both to grow by at least 10% which with their low P/E's will IMO cause their stock to raise more than 10% in price which makes the trade profitable and safe. SO it becomes a matter of a safe play in an increasing volite environment that has a better chance of a return more than a CD.

    • Flyer - thanks for the additional insight. I'm still trying to wrap my brain around options. Slowly but surely, I'm getting there. Just curious, how did you SHLD trade work out?

      OT - any thoughts on AAPL at these prices?

    • "The company I work for on my other day job a fortune 500 compay just had to expand its data center. Bought 9 million worth of EMC DASD, upgraded to new CSCO switches, and bought a new IBM mainframe."

      How long ago did that take place? The reason I'm asking is that I swear that a few wks ago when I mentioned csco/emc and a few other stocks, you said something about csco had failed you and you would not give it another chance? I'm guessing that you just didn't want to get behind both those companies on a short term basis but you feel better about making a long term bet, right?

      Mattt- I would have replied to your Q about longer term options but unseen had already said pretty much what I would have. I'll reiterate a few things though. Some stocks have options that can be a little pricy to want to make a bet on due to volatility &/or their underlying stock price (like goog). The leaps on goog are in the $100-$200 range which is a little pricey for an option. Going deep in the money can be advantageous because you can avoid paying so much time value in the premium. The offset, of course, is that you have to spend more on the option but you'll be tracking closer to $ for $ as the stock goes up and at a much higher percentage because of your reduced basis.

      GITA!!!

    • I agree CSCO is in a sweet spot right now because everyone needs more bandwidth and they need CSCO's equipment to get it. To be honest, I like your trade because you've convinced me that it doesn't have a lot of downside. I just don't have a lot of faith in this market at the moment.

    • bear overall market yes we have been in one for awhile now. But CSCO is in a bullish market with the expolosion of the internet. The company I work for on my other day job a fortune 500 compay just had to expand its data center. Bought 9 million worth of EMC DASD, upgraded to new CSCO switches, and bought a new IBM mainframe. Expanded its DR site, replaced tons of pc's/servers with new ones, using VMware to expand capacity while reducing energy usage, and maintianing the same floor space. This after doing nothing for 5 years. Companies are starting to hit the wall IRT technologies and need to upgrade or die. The technology from 5 years ago is no longer able to allow them to compete with their new internet applications, bill pay, VOIP, graphic intentive applications, terabytes of information, there is only 24 hours in a day and the more information you have the faster you need to be able to process that information to meet SLA's and get the billing out on a daily basis.

    • That makes sense. Thanks for the explanation. Your CSCO options sound like a pretty safe bet. This unfortunately seems like a bear market and it will continue to go down some. Now sure when I'll be buying for the long run, but it's not now.

    • yes and no. the time premium is the call SELLERs insurance. It is the "rent" on the right to buy the stock.

      Thus the time premuim is what makes options stacked in the sellers favor. So I could pay $40.00 for the next 3 weeks or $200.00 for the next 2 years. That means my "rental cost" for the 2 year time frame is very inexpensive or about $12.00 per month. If CSCO avg an increase of .12cents per share per month I will break even on the trade since my option should decrease in vaule by $12.00 per month all things being equal if the stock stays at the same price. Since CSCO has had a ~30% correction the odds are stacked in my favor instead of the house or so I believe. I am willing to pay $12.00 a month for the right to buy CSCO at $15.00 per share. Those buying the $feb $22.50 calls are paying about $13.50 per week for that right. Since the call is deep in the money and the time premuim is low than the call should basically trade tick for tick with the underlying stock. If CSCO goes up $5.00 in on month then the option would go up ~488.00 if it takes two months than the option should go up ~$476 etc. If it takes the entire 2 years for CSCO to go up $5.00 than the option should return $300.00 of the move. the quicker it goes up the more profit is returned, or in other words any movement about $2.00 (~8%) in the next 24 months will return a profit. If it goes down than the seller can buy back the option and write a new call with addtional time premium.

    • The time value acts as an insurance policy basically. You get a smaller return when compared against short term calls, but more time for the investment to turn around right?

    • That makes sense. I was just curious because most of your options trades seem to be short term.

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