1. Institutional investors (Fidelity, Black Rock, even Kirk's First Security) always mitigate risk and usually more so than individual investors;
2. One way to mitigate is to earn interest by loaning your stock to those who prefer a short position - (that's why Fidelity Dividend Growth is in this name - the dividend is the interest payment on the stock loan);
3. Seemingly long-only investors like Kirk's First Security are very long-term players, therefore they loan out their stock and use the interest payments to dollar cost average their investment to lower exposure (so Kirk is making money on the idea of pending news alone - if the results are good he makes more money, if the results are bad he just gets his stock back at a lower strike and he waits);
4. Once you understand that, you can appreciate that while the really big money prefers a positive outcome just like you do, they have made money on your speculation, they are are less sensitive to all the chatter before news and if the news is bad, they'll just wait;
5. Why does all that matter? BECAUSE IF THE NEWS IS BAD, THE BIG GUYS WHO LOANED THEIR STOCK TO THE SHORTS CAN'T SELL UNTIL THE SHORTS HAVE BOUGHT BACK THEIR POSITIONS TO REPAY THE LOANED STOCK. THIS CAUSES BUYING PRESSURE ON BAD NEWS WHILE THE BIG LONGS CAN'T SELL, CREATING AN INSTITUTIONAL "FLOOR" UNDER THE STOCK PRICE FOR A FEW DAYS AFTER NEWS. SO LEARN FROM THE BIG GUYS: STICK TO YOUR THESIS AND IGNORE THE CARNIVAL CHATTER. IF THE NEWS IS GOOD IT ALMOST MUST SOAR WHILE THE SHORTS ARE BUYING TO COVER. IF THE NEWS IS BAD, THERE'S GOING TO BE TIME TO GET OUT BEFORE THE BIG GUYS CAN MOVE, MOST OF WHOM WON'T SELL ANYWAY.
For anyone that might be tempted to sell based upon the "insider selling" posts here, rest assured that all insiders and major holders are locked-up pending a news event that may have a material impact on the value of the company's equity. Such posters must be liars - by pure force of securities laws alone. Stick with your thesis.
"IF THE NEWS IS BAD, THERE'S GOING TO BE TIME TO GET OUT BEFORE THE BIG GUYS CAN MOVE, MOST OF WHOM WON'T SELL ANYWAY."
What color is the sky in your world?
Three weeks ago, AFFY closed at $16+ on a Friday, released bad news on Saturday, Monday morning opened @ $2.........so explain to me how you can get out unscathed be fore anybody........big guys or small guys.
In pre-market it took an initial trade of 26 thousand shares on AFFY to drop the price from $16 to $2.
You sound like a fool with your very naive comment.
Good logical post. Thanks. I made a very good options straddle strategy with Oct. $7.0 calls and $5.0 puts. As a result, If the results are good I will make a lot of money with my Oct. $7.0 call options. I bought enough puts to protect my investment If the results are bad. This way I can sleep at night going to any binary event.