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Skullcandy, Inc. Message Board

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  • coreylynnh Dec 20, 2012 11:57 PM Flag

    Is this stock broken?

    But I am not panicking because I still think there is a profit to be made. Meeting analyst expectations is not a game-changer in my opinion and therefore I am still bullish on this stock for the future. Its fundamentals are still really good compared to its industry. The P/E ratio, PEG ratio, P/B, P/S all scream undervalued although P/C is a worry. This lack of cash is not a great sign, but then again SKUL has no debt. I sold a Dec call for .20/share (1.8% premium) so my cost basis is currently 10.25. If I can sell another call for greater than .25 I can potentially sell subsequent calls at the 10 strike price but that could eat away profits due to the $1 drop in strike price. I will wait a week or two to see what the stock does and see if I can sell a Jan 11 call for .20 or more. If I can sell another 11 call and the stock appreciates above 11 then I make a very nice profit, somewhere around at least a 30% annualized return (I already have 6.8% from the put and call I already sold and after January this will be 3 months investing money in it). If the stock doesn't appreciate then I will take what call I can get and wait patiently. If the company continues to grow at such a good clip investors will eventually drive the stock back up to 11 or higher and likely within the next year. I will then take my profit when it hits 11 or above. The key is patience. If there is a game-changer I can always cut my losses and exit. They all cannot be winners. But I will be much better off than if I had bought the stock at 12.50 when I sold that initial put. Luckily I only have a small position on this stock because I am learning how, and if, my option strategy can be applied to growth stocks.

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