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Seagate Technology Public Limited Company Message Board

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  • disk_investor2 disk_investor2 Jan 22, 2009 10:59 AM Flag

    Technicals

    "Why would you sell a covered call on the March 5's for 25-30 cents for a stock that you think is going to $5.60?"

    Despite you array of posts, pontificating, often wrongly, on everything, you really are not that bright.

    The report yesterday indicated STX isn't ready for a major breakout for a while and will probably trade between its 20 day bollinger Bands, i.e. 3.49 and 5.70.

    Over the last year, STX has rarely traded below its lower Bollinger band, which should provide support just as the $5.70 level provides resistance. FYI, the sell off two FRidays occurred at $5.69 and was probably due to this technicalk factor rather than Kramer's comments, the layoff announcement, or Luczo becoming CEO. That was just BS used to panic the sheep and feed the press.

    You would write the calls at $5.60, not at $3.60, dummy. If you would write the March 5 calls by mid-February, as Vikes pointed out, you would probably get at least a $0.80 to $1.20. premium

    THen, if the traders tank the stock again for whatever phoney reason at $5.70, your stock probably won't get called and you get repeat the process again.

    Volia, you can make good money with a very minimal amount of risk with a stock that is going no where. FYI, this is probably the strategy that most professional traders and investors are now executing. You go with the flow!

    Now, why not play the mirror strategy with a short sales and writing covered puts ?

    Three reasons:

    1. The lower $3.50 bollinger band is in between the the $2.50 and $5.00 put strike prices, which gives you less time leverage over writing calls at $5.00 when the top band is at $5.70.

    2. STX is at an all time low and heavily oversold.

    3. If Luczo makes a deal for STX, you could get screwed if you are short!

    Now instead of constantly yapping at every post you don't like, why don't you stop acting like some nickel and dime little putz and make some money or give us your theory how to play this stock, if you have one which I doubt.

 
STX
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