Looks like we might have our first unexpected super hit coming in 4 days:
Batman: Arkham Asylum's reviews are just out and the average Metacritic score is 92. Wow.
They're calling it this year' Bioshock... If it sells anywhere near that:
1) August's NDP comps will be definitely positive
2) We'll start Q3 in great shape
Good weekend to all :-)
I am pretty sure we just went over the opportunity cost at great length. There are plenty of rational reasons to own this stock, and plenty of rational reasons to sell it.
Lionelman, I like the 22.50 calls. I like all in the money calls, especially if you have the funds to go out a few months, definitely a nice way to play the strong second half of the year that most people on this board are expecting and won't tie up your money as much as owning shares.
We all have our investing styles that work for us, I definitely wasn't trying to criticize your trade, and if it came off like that, I am sorry. I still feel that $22 is an excellent entry point, and yes, you missed a great opportunity to sell for some nice gains, but since you have a nice defined time frame I don't think it really matters all that much, you are looking for a bigger move. I know that the sentiment on this board is that it is a given that this stock will be trading above $30 soon, I tend to agree with this (soon being next year) but I don't think it is the stone cold lock that everyone else seems to think it is. This stock is manipulated more than any stock that I follow, and I am always wary of something that moves around in the manner that this stock does. I love the company, I love videogames, for me, this stock is an excellent channel trading vehicle that also happens to have the potential to be a great long term investment.
I am looking at some 6 month out calls that are close to the current strike price, or possibly going long on some deep in the money calls. I think for a pretty small investment you could make a pretty big killing with those (just buying the stock at this price is fine as well). I will post my opinion (which is worth exactly as much as you will pay for it, nothing) after I crunch the numbers and analyze the next week of trading. I still anticipate a nice market correction, but I have been wrongly predicting that for a few months, if it does happen, I would definitely try to bargain hunt a nice block of GME shares.
"Personally I prefer to focus on how a company runs it's business rather than predicting investor sentiment from one day to the next. I am much better at the former rather than the latter, so that's where I prefer to spend my time and focus my energy."
Are you? Because you keep talking about GME being "undervalued" and talking about "investing". There is no investing in GME any more. There is no long term here. The business model is in danger therefore any P/E is arbitrary. Sure it may go to $30, or $18, as the multiple expands and contracts thanks to index tracking or speculators. Within 5 years though, this will be half the price it is today. That makes it a terrible investment.
In the meantime, enjoy the volatility. Don't be afraid to take profits because you *will* get another opportunity.
You are right James in that trading GME is not my MO. My time horizon isn't infite though, and I will aim to find the best exit point some time within the next 6 to 18 months. Hence I still follow GME pretty closely.
You are right as well that the miss was anticipated, by me included. However there was a lot of stuff going on last week, such as the PS3 price cut, and we are heading into the sweetspot for GME. At the end of the day GME was still undervalued before the drop even accounting for the fact they missed earnings. The only thing driving it down was short term sentiment and that is never as predictable as you make it out to be. In the end it was a pretty minimal drop, and if I'd followed your advice I would have been out before the run up anyway so my net gain would have been pretty much zero either way. You can't have it both ways.
Personally I prefer to focus on how a company runs it's business rather than predicting investor sentiment from one day to the next. I am much better at the former rather than the latter, so that's where I prefer to spend my time and focus my energy.
"...every single educated opinion on this board (not many) knew the stock was going down post earnings after an insane run up into earnings..."
I, for one, didn't "know", kept my shares and added quite a lot more on Thursday. My opinion, though perhaps uneducated, was and is that the run up was nice, but far from "insane" and far from over.
I believe that when it resumes going up, and that could well be early next week, it will go straight to $30+. Why?
Any bit of "unexpected" news will trigger it: An analyst comment (notice that we haven't seen any downgrades that I know of), An out of stock situation in the PS3 slim due to high demand, Batman selling big numbers, Nintendo or Sony cutting prices, etc.
As such, I personally think the wisest short term investment decision is not to try to trade the stock but to just keep it. When the run up begins, I sincerely believe any missed gap up will more than make up for the 10% drop we've seen last week.
Of course, in hindsight, it would have been better to buy post earnings than pre, but I would never have taken that risk and I don't regret one bit not doing it.
So, in short, I believe the opportunity cost you refer to is a false one if you believe as I do that the stock is way undervalued and at a real inflection point . Better buy and hold in this case. Of course, if your belief on the stock short term potential is different, trading it may well be a better choice then.
You have lost plenty of money in the form of the opportunity to sell the position and rebuy it very close to where you bought it originally, in an even greater amount due to the profit from the sale of your original position (if you are so inclined). You have not cost yourself any of the money that you originally put in, but you could have played your trade far differently with better results and you did not, your money is tied up now, not the worst thing in the world...but the goal of the game is to make money, not to hold onto pieces of paper in your trading account. Even if you are long term, this trade was easy, every single educated opinion on this board (not many) knew the stock was going down post earnings after an insane run up into earnings. If you are actively trading stocks, it should always be your goal to maximize the amount of money in your account, and minimize your exposure to risk, learning to take profits is a key ingredient to this, if you are super long term then this doesn't apply to you, but if you are then the day to day or even week to week of this stock should be of no concern to you either and this entire message board should be largely irrelevant. Just my opinion of this particular situation. Trailing stop losses aren't the worst thing in the world either, on this particular stock, they kinda suck as they will trigger pretty regularly (nothing wrong with making money though), but on others, pretty invaluable for situations like this.