Novice Questions ...

Discussion in 'Options' started by pattersb, Apr 4, 2006.

  1. pattersb

    pattersb Guest

    I'd appreciate anyone that can answer the following questions....

    Why in the world would anyone have bid OSTK up from 22 to 32 these past couple weeks?

    I suppose, my real question is, why does anyone buy anything at a premium that has recently and is so clearly again about to collapse?

    Who is it that has all this money to burn and why do they burn it, and who gives them the power to burn it?
  2. MTE


    And this relates to options how?:confused:

    Forces of demand and supply determine the price so if the demand is greater than supply then the price goes up and vice versa.
  3. Even though this question really has nothing to do with options, I'll throw in my 2 cents.

    The chart is a classic double bottom. The buying action on 3/13 looks like it triggered a lot of short covering which only added fuel to the fire. Then predictably, the previous strong support became the new resistance at 32.50 or so.

    From where I'm sitting, a move back up to 32.50 is probable, but a break though is unlikely. 200SMA lies just above that at 34.50 and falling.
  4. pattersb

    pattersb Guest

    sorry about the unrelated post. I'm new to the trading world, and got a little beligerent there. (Incidently, I did buy apr 30 puts at 1.3)

    I noticed this company was in the portfolio of one of the mutual funds I hold, and got a little upset that any "professional" might add to his position in this company.

    This stock/company is a dog, just not sure why someone would pay a 50% premium after a two week run up.
  5. The obvious questions are;
    Is it a value fund?
    Is it a growth fund?
    How does the fund describe it's strategy?

    There are many reasons tha a fund would add OSTK to its portfolio. If you are investing in funds, you are probably looking for long term gains. Most investors in that fund would likely freak out if the manager started focusing on short term trades. For the long term, OSTK might not be a bad company. Relative strength is increasing, it has lots of room for analyst upgrades, and insiders are buying up shares. Your fund might have added it for any of these reasons.
  6. pattersb

    pattersb Guest

    thanks, I obviously have much to learn. (Or perhaps I already know more the pros ... we'll see)

    it's a value fund ... I guess, the fund managers and I have a decidely different view of what constitutes a value.