ZAGG: Why We Want Downside Exposure By Jared Woodard - 08/23/12 - 10:09 AM EDT Tickers in this article: ZAGG SKUL WEBINAR, September 6: Designing and Implementing a Retirement Plan CLICK HERE FOR INVITE AND TO REGISTER. Zagg (ZAGG) is a company that got its start selling cases and screen protectors for mobile phones. You know, the thin pieces of plastic that you can buy directly on Amazon from companies in China for $0.99. ZAGG diversified more recently into earphones, but that is also a crowded space and they are at least one or two steps behind companies like Skullcandy (SKUL), which has followed the trend of linking up with celebrities, sports franchises, and DJs. See if Cramer and the Real Money Pros are trading (ZAGG) ZAGG CEO Robert Pedersen resigned unexpectedly on August 17 after selling a significant portion of his shares to meet margin calls and in order, he said, to "focus on his family, his church and a family foundation." On Tuesday, a New Jersey law firm announced it was investigating whether ZAGG had violated federal securities laws related to these events.
ZAGG and SKUL One-Year Performance Source: TD View Chart » The stock is down nearly 50% on a yearly basis. Options markets, however, have not reacted strongly to recent troubles, as both one- and two-month implied volatility estimates are within the bottom third of their two-year ranges. These moderately low volatility readings suggest that traders do not anticipate that price swings in the shares will be more dramatic than they have tended to be in the past. It is worth noting that two-month implied volatility has ranged between 50% and 140% since 2010 - even in quiet markets ZAGG shares tend to be volatile. We like a long SKUL / short ZAGG pairs trade as a longer-term stock position, but to get a tighter reign on risk we can buy a vertical put spread.
I saw a relatively positive post on thestreet regarding Skul not too long ago, about a week, discussing that it is looking like it is trying to break out (which we now know hasn't yet happened). No indication that Cramer is on board.
Cramer is crafty though as we all know. If he can come out and say that he has been "won over" (and he has been dour on skul in the past) then that could be a perfect trigger for an epic short squeeze. And he knows that. You don't want to be on the wrong side of a Cramer trade early on. You will get crushed.