MSFT has been showing a lot of strength in this whole sideways/downturn market. Perhaps its going back up toward $26 before we see some sort of break down? -troll
That would be a 62% move from the recent low for a stock with 8B shares outstanding (and that is not even counting options given to employees). So you are telling me that MSFT is worth $120B more today than it was three months ago? On top of that, MSFT has risk in that it may take over YHOO or other companies. This move is two fold. In order of importance: 1) Funds are forced to put money into play. Having MSFT on your books rarely looks bad. Like many stocks, MSFT has overshot "FV" hugely. Analyst upgrades near the top get the final dumb money to buy for institutions to sell into. 2) Windows 7. People have to eat first before they buy new hardware.
I completely agree with you. I should have clarified my point, it was from a technical standpoint and not a fundamental standpoint. I also agree with you on your point that msft did overshoot FV, and if I was going to short msft, it would be in the $26 or high $25ish level(s). From a risk/reward standpoint only. It would run up against resistance and perhaps people would figure out what you did and then it goes down. Great points btw, but my question is this: In relation to Windows 7, which is rumored, to come out around the holiday season. Do you still think it won't sell that well? It has been getting some good reviews from the beta. Just an after thought. -troll Edit: I just popped open my trading platform and checked. 61.8% is a fib. level in my platform (no tweaking). It happened to be really close to that 62% figure you stated, just thought I'd add that in from the technical side.
Took profits on 1/2 of MSFT position. MSFT is now only slightly overvalued, maybe within a dollar of where it would be attractive, all things being equal. This would seem like good news, but I have a paper loss on CTXS, so I am only up a little bit on this position pair. I am holding all of CTXS against some short MSFT, a somewhat dangerous position.
Man finally got the gap down today that was needed to kill the beast. Took awhile. Looks like your in a good position to capture some of the downside. Great job & Good luck. -troll
The S MSFT L CTXS is a pair trade based on my belief that MSFT is going to take CTXS out. Even when I thought MSFT was close to FV and bought back most of the position, I held long CTXS because that is part of the play, even though that increased my risk considerably. ' If I were playing just the spread, I might take profits in CTXS, but what I don't want is to be taking nickles and dimes, and miss the $10 premium that MSFT offers for CTXS. There is nothing wrong with what you guys are doing imo, but we have different ideas about the trade. I am willing to trade MSFT, I am not willing to let go of CTXS.
This ruling potentially affects the entire sector, but it is no reason to panic out of L CTXS, imo: http://finance.yahoo.com/news/Patent-Protection-on-twst-453957241.html?x=0&.v=1