Trade idea on YHOO: Sell PUT 14 bid/ask 0.11/0.12 and buy Call 16 bid/ask 0.11/0.12 for Sept. This is called a risk reversal trade. You pay almost nothing for this trade. You will lose money if YHOO goes below $14 and your gain is unlimited if YHOO goes above 16 (imagine a buyout at $23)
$23 was just a wild guess. I just wanted to use my imagination. It is not probable but it is possible. Now that YHOO has decided to keep the cash and use it to expand YHOO, being a cash rich company will make it attractive for a takeover. I believe maybe not too many companies want to buy YHOO but they also don't want to see YHOO in their competitor's hands. For this reason, I believe they will bid for something like $17 that will be rejected by YHOO BOD but that will push YHOO above $17 and make it more expensive for the bidder's competitor to buy. Do you watch storage wars?
i only stop at that channel for a minute to laught at those people haha.. but yea i've seen the show..
I'm actually bullish on the stock, but only if it 1st trades in the $14 - $14.50 range. I just don't see it rising much, until it gets the bargain hunters interested in it at a better price. Until then, it will continue trading within it's 4 year trend of $13 - $17.... give or take an occasional S-T spike here or there. Placing the bet you discribe above seems like a waste of time and commission money. I'd rather keep my money in cash, ready to act, when some stock suddenly comes into the "investment zone" I want..... including YHOO. I'd hate to miss out on an opportunity, because my cash was tied up in a stock, still stuck in the middle of it's 4 year trading range zone.
I don't place bets on whether a stock will rise, drop, remain inside trading ranges, or outside trading ranges. That's not my thing. Too much reliance on a coin toss. Particularly when the bet must occur within a potentially volatile unit of time. I may have an opinion as to whether a stock will rise. But I have "no idea", WHEN the rise will occur... HOW HIGH the move up will be... HOW FAST the move up will take place... WHEN the up move will stop... WHEN it will reverse... and so on. Much easier for me to analyze a stock, (fundamental and technical), and predict what price it's unlikely to drop below. And if it does, evaluate whether it's "recoverable" to that price. Why toss coins, when I have a pretty good record of predicting downside support and recoverability potential? And why have the stress of theta working against me, when I can have it working for me? While buying a call may have more "potential" for greater profit,.... I prefer a greater "probability" of a profit. It boils down to potential vs probability. Living in Las Vegas, I'm more comfortable managing "probability" bets.
So buy a call for once putty Man.. take a little long premium exposure... think about it..... check this trade... on the jan 14's yahoo trading at 15... buy 1 call striked at 12 jan 14 opex = 4.05 only 1 dollar of premium Sell 2 calls striked at 20 jan 14 opex = 1.48 all otm time sold to make up for bought premium plus 43 cents.. i really like this trade myself.. the twenty strikke is far enough away to manage... i'd have to look at it closer.. but putty man your always short premium... why not try this kind of strategy...??? i'll come up with all the breakevens/margin requirments and their changes.. just so i know where the pain starts if theres an upside blow out... my thoughts are though if the stock continues to dive like crazy.. just by back the short option and hold a strong hand on the long one.. seems like leaps are a good way to invest in stocks .... a good debit or ratio seems just what the doctor order to get leveraged exposure..
Time : 1:56 PM ET. YHOO is trading @ 14.73. Based on some semi confirmed info that I have received YHOO should pop based on some organization decisions that will be announced soon. I am back again on this stock with full force. DOYDD before commiting to any trade.