Sold ERTS Apr 55 puts today @ $.90

C

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.

Thoughts?
 
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.
 
Quote from GetWhatUDeserve:

I can't think of a more self-contradicting statement in trading.
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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.
 
Quote from 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.
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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).
 
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.
 
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