I don’t like spec plays heading into a conference call but I am playing VMW on the long side today, using options. I did buy distant puts to lower the risk so I guess I have a funky long straddle set to go. Let’s see what happens.
VMware, Inc. Earnings Conference Call (Q3 2007)
Scheduled to start Wed, Oct 24, 2007, 5:00 pm Eastern
Don’t guess when a trend is over, allow the market to show you when it is over!
VMW – 107.04, the stock completed the $60-$100 run and is now above the triple digit threshold. I am looking for a base at or slightly above $100 for a new entry (to add shares). If it doesn’t base, I will ride my original position.
Daily Screen for Friday 9-7-07
VMW – 69.79, it’s the first time I am covering the stock as it is yet to build any recognizable base. However, the support and hype is still there so be ready to pounce on pullbacks and look for a ride towards the triple digit threshold ($100). An unusual $60-$100 run.
Daily Screen for Tuesday 9-11-07
VMW – 76.76, the stock was up 10.45% on one of the largest daily volume days since its debut. Today’s move shot the stock into new all-time high territory. The stock is up 20% over the past four days.
VMW is front and center on my watchlist, but as much as I like it, after AMZN I’m hesitant to pre-play earnings. I’ll be buying on a breakout of the old high. If things go according to plan, you’ll have made a nice gain by then 😉
Paul,
You are 100% correct as I don’t like these plays either and that’s why I couldn’t go all out with a full 1% risk (I grabbed the cheap puts to protect from max loss in the position).
Chris/Paul,
Completely agreed with Paul. After AMZN, I am kind of concerned about the pre-play earnings. In fact, today’s price action does not look convincing. It could be due to general market weakness. But I am buyer tomorrow if it breaks out
Looks like VMW came through with their earnings report from the third quarter. I do find it strange though that the company said it wouldn’t give a fourth quarter outlook?
Looks like VMW came through with their earnings report from the third quarter. I do find it strange though that the company said it wouldn’t give a fourth quarter outlook?
I’m just curious, why does AMZN lack of reaction to its earnings affect your decision on vmw? Is it because of what you think the market direction will be?
Also, if you’ve got time, could you explain mathematically or in words how the options reduce your risk?
I’m a complete noob…I have been following for a couple weeks. I really appreciate the articles Chris.
Hey Chris,
nice job on the VM ware play. A nice 10% pop! bet your options did well huh?
Ty,
The calls look great but I am still holding. With expiration several weeks away, what do you think?
The puts are worth nothing so I’ll let them expire and save myself the commission.
Hi Chris,
you would want to sell out of the Options very soon if you have a nice gain, as Options tend to lose most time value (theta decay) in the last 30 days until expiration. So if there is a dip, they can dip hard. If you wanted to capture more gain, and you are bullish for the next few weeks, you could Roll it forward. Sell these and buy out another month or two. Your broker (like options express or Thinkorswim) may have the ability to just push a button to “Roll” and you pick the month. Rolling is a good way of locking in gains you already have, and then buying more time in the trade to capture more gain with less risk of theta decay.