Sold ERTS Apr 55 puts today @ $.90

Discussion in 'Options' started by Crevalle, Mar 22, 2005.

  1. Crevalle


    This stock is oversold IMO (RSI, etc), and the fundamentals are still very strong. I follow video game stocks quite closely, and I would be pleased to own ERTS at $55 if I am exercised. I love these situations. It showed strength on the gap-down this morning as well.

    I also like that the Nasdaq is holding 2,000 fairly well. I think we are about to make another run at 2,100 over the next few weeks if we can hold 2,000 over the next few days.

  2. I can't think of a more self-contradicting statement in trading.
  3. Pabst


    Seldom do stocks quickly recover after a gap of this magnitude. I'd look for a few months of sideways trade in the "re-valued" zone. That being the case I don't think you have a bad position but I think you could go a bit further out (like June) and collect some additional jack.
  4. Crevalle


    I hope you're kidding and that was just a lame attempt at humor. If not, you need to study gap ups/downs and the following volume/direction. I've made a lot of money shorting/longing gaps that don't have follow-through strength. Go read Marty Zweig.
  5. Crevalle


    Yes, I believe you may be correct. That being said, I just don't have the stomach right now to ride out a longer contract. I just took a wild ride on RIMM (check the charts) being short bear put spreads at 65/60. It worked out very well in the end, but I think I got an ulcer (j/k).
  6. If I may ask, do you have an estimate in mind for the fair value of ERTS?

    The technical picture seems a little shaky for selling puts at $55, though there is some argument for support there. The better play could be an investment position, which you seem to be thinking about.
  7. HectorG


    You're going to lose a lot of money on this trade. it's a risky/dumb trade.
  8. If it bounces you'll do well.
  9. Crevalle


    Thanks for that deep, well-thought-out rationale.
  10. C. so what is the plan, do you have exits or are you looking to buy at a discount?
    #10     Mar 22, 2005