You are right on the money. I have been writing
covered calls all along with the piece de resistance
being the May/00 $120's at 7 7/8 when the stock was
trading in the $90 range. Bottomline, no downside risk
and cash on the barrel head. Just did 1000 shares on
June/00 $85 for a nice and tidy profit. You can play this
game the other way without being the harbinger of
gloom and doom like some of our friends on this board.
Quite honestly, I don't know how anyone can be bearish
on this stock given the fine points you made along
with the fact that the NASDAQ was at about 3000 a week
ago. Nsthil was shorting when it was in the $50-$60
range. Thats gotta hurt!
A sideways churn back
down to the $50 range is possible when the next few
Qtrs #'s come in, but it may be possible that the PS2
hype keeps the stock somewhere in its current range.
Remember the old adage, buy on rumor, sell on the
news...well we are solidly in PS2 rumor
EA's Q3 and Q4 2001 (Oct-March) will show a huge
upswing over the previous qtrs. By that time everyone
will have forgotten the poor earnings and this stock
will be headed back to the $100 territory....and we
don't have that far to go.
BTW, don't think that
there is much of a chance of MSFT or AOL buying ERTS.
AOL has ERTS already committed to a multi year
deal and ERTS is forking out the dough for it. They
have the access and ERTS wants it. ERTS has the
content but they are not the only gaming company out
As for MSFT buying ERTS that wont happen either.
ERTS would be a basket case for a while as they have
committed too much resources already developing for Sony.
ERTS pretty much in Sony's back pocket.
Here are a few other scary scenarios for an ERTS
1. MSFT buys ERTS to guarrante success of the XBox
and deal a blow to Sony in the process.
a deal that makes more sense. AOL / Time Warner buy
ERTS following their own merger. If the gaming channel
is a success this is not too far fetched. AOL might
finally buy something of long term value rather than
wasting money on things like ICQ and
I am an ERTS long and like you believe the stock
will be going down some in the summer. How much I
don't know but not enought for me to sell. I'm loving
the volatility, I've been making a killing on covered
call writting over the last 5 months or so.
is quite temping to sell my long shares now, but I
will be rewarded in the end.
The end result is I
sell my long shares sometime in 2001, and bank a big
pile of long term capital gain.
short position, I think it is logical but quite risky.
People buying ERTS right now know darn well the next
couple quarters are going to be tough, but they are
buying anyway. Like myself people want to be on board
1. PSII is launched.
and the AOL game channel go live.
3. When AOL
offers the gamming channel to 20 million or so Time
Warner customers, via web enable set top boxes. :)
When the investing community realizes that
entertainment content on the new AOL/Gateway/Transmeta platform
is already a lock for ERTS :)
example of how you guys lose long term. You are
out there covering your ass right now. Anybody who is
shorting this stock in the $50-$60 range simply does not
understand this business nor the market. This is why I
recommend that absolutely nobody should follow your lead.
You are a source of good advice however if you follow
one simple rule, whatever you do, do the opposite.
fight the tape but I do not believe that ERTS
will continue along with the momentum. No need to lose
money on this short because the fundamentals are still
not good for anothe 2 qtrs at least.
to anyone that went long in low 50s and held on.
swallow your pride & stop shorting for a little
while.You must learn to identify a momentum
shift...analysts are pumping the market up right now...saying
things like "the summer rally is here".I do believe that
we will see another rate hike in June...feds r
hating this rally right now!! You may never go long on
ERTS...bECAUSE u might never see the 50s again..analysts will
keep the market pumped up for now.Most of the good
stocks r up 30-40% in less then a week..with little
Jim Jubak, MSN MoneyCentral.com talks about the
stocks of the
ERTS in playstation 2 release. Stocks to go to $85 in
first half of 2001
ERTS is up less than 10% from last entry point on
the short side. Hardly cold sweat material. If you
made 19k buy getting in at the bottom then congrats to
you. This will be the third time shorting ERTS in the
last 3 months and I have made 25-35% each time. Maybe
I will have to take a loss this time but I doubt
Best of luck