CROX is looking attractive ... on the put side, but not until the Feds make up their mind

Here's what I am thinking about CROX, they are going report sometime this month or next (last earnings was Oct 31, 2007 so should be soon) and they just got slammed as we all know. Most hedge fund managers felt it was a steal at 45, 35, etc. and a lot of them loaded up on CROX. Remember that note, read on.

Outcome #1: CROX guides lower
If CROX guides lower again (and this is going to be likely due to 'recession' fears), then won't all the hedges start dumping massive amounts of CROX? That supply injection is going to drive the price down, down, down. If there is no recession fear, then CROX will tumble even worse because they guided lower in a "happier" environment.

Outcome #2: CROX guides higher
If CROX guides higher in at the cusp of a recession, then everyone mostly likely will call BS and dump CROX. If the recession fear is gone and CROX guides higher then CROX will sky rocket towards its 50-60 level.

So here's a roundup of the possible outcomes:

Outcome #1: CROX guides lower, with recession fear
Outcome #2: CROX guides lower, without recession fear
Outcome #3: CROX guides higher, with recession fear
Outcome #4: CROX guides higher, without recession fear

Outcomes #1, #2, #3 will result in CROX taking a little bit more of a dive. Outcome #4 is the only possible one where I can see CROX popping. So 75% of the possible outcomes results in CROX going lower which is why I like it on the put side.

So now the only questions you need to ask yourself to tailor this to your own risk level (I know what I am going to do ;P) are:

1. Do you believe we're going into a recession?
2. Do you think CROX will guide higher, or lower?
2. Do you believe that hedges will toss CROX back in or hold for the long term?

I am personally going to wait until I see what the Feds are going to do, and if they do something what does that signify recession wise. If we have 2 rate cuts very close to eachother, I would think something is very wrong ;P. If they come out and say we are NOT in a recession, etc. then that also changes the game play.


Other Data:
COSTCO is starting ot sell CROXs now, and when I went by there to check out the demand on a Sunday afternoon and there was lots of supply left (i.e Saturday selling wasn't all that great). Also the positioning of the CROX display was almost near the cashiers (i.e when your cart is already full and you're mentally decided on 'I've already bought enough') versus near the front (i.e when your oversized cart is pretty empty and you're aren't mentally at a buy-stop). It wasn't even in the back, which is another premier position usually reserved for the must haves.

I might be missing some important data here, so if you have some please share with the rest of us.

--Kevin

Not Touching Market Until Fed's Decision

I was looking across the board for techs and retail since I feel those are going to be hit the hardest if there is a recession to come and didn't see any 'deals'. Pretty much most of them are priced with recession fears already built in, except maybe LULU, NILE and UA.

LULU doesn't report until well after the Feds make a decision, so best to wait and see before spending on LULU.

UA, I noticed that they are sponsoring all the real world stars on Gauntlet 3 or 4 (whichever is current) with all UA apparel. Now, Gauntlet is a MTV show, so I can't imagine it being cheap (it's not a matter of we'll throw in free clothing). Gauntlet was already filmed a while ago, so that advertising spending will be reflected either in this earnings, the previous or next. I am starting to understand why the analysts were fearing UA advertising overspend. Anyhow, more research here is needed.

AAPL, P/E at 28 ... I still think that's a steal, but again waiting until Fed decision. Alright, good luck everyone.

--Kevin

Sold MSFT at a Loss -- C'est La Vie ;P

I have to get my car fixed today so there's no way I can be at the screen to watch this. MSFT didn't pop as hoped and deserved because of a rumor going around that certain hedge funds are in trouble. Greaaaaat, the people the manipulate the market are in trouble themselves ;P There will be another day, another opportunity for profit.

Sell to Close: 100 calls of MSFT Feb 37.5 at 0.08

Gain: -$1500

--Kevin

I Am Moving Next Door to Bill Gates on Monday

I was looking at Google's top winners and top losers today, and this was the top winner! If you bought one share of this yesterday you'd have 8 billion in your pocket today! Wuhoo, I have 100 shares! Just kidding, must be a typo on Google's end ;P

--Kevin

Rogue Trader: Looks Like Someone Else Is Making Money and Having Fun

Love to read stories about rogue traders, especially futures traders. This one cost a bank 7 billion (yes that's with a 'b'). Enjoy,

http://articles.moneycentral.msn.com/Investing/Dispatch/RogueTraderBlows7Billion.aspx

--Kevin

Ironic World We Live In: Broke Back Market

I was flipping through the channels last night and noticed something odd: the economic markets worldwide are melting and ... the top news is the passing of Heath Ledger? It's a tragedy that he passed, but why is that more newsworthy than the market carnage we've seen this week? What a funny world we live in. Anyways, the distraction seems to be working, two straight days positive ticker.

--Kevin

MSFT Earnings Report

I had a meeting during the earnings release and came home to Microsoft earning's report. I picked these up earlier today at I think a good discount:

Buy to Open: 100 calls of MSFT Feb 37.5 at 0.17

Closed at about 0.30 so that plus the earnings report should produce an ok (not fabulous) pop tomorrow. Assuming market continues it's uptrend.

--Kevin

Sell AAPL

I sold those AAPL calls today prematurely ... well it didn't have the momentum that I wanted in the short term so wasn't premature. Just following the plan, but took a small loss.

Sell to Close: 10 calls of AAPL Feb 165 at 0.7

Gain: -$210

--Kevin

Update on MSFT

I spoke with a friend, and he told me that in terms of guidance, at least MSFT has some major product releases in 2008 in case MSFT guides lower. So no, I don't think MSFT gets as slammed as AAPL ... we'll see at 4:00 pm today ;P

Good luck.

--Kevin

MSFT Reports Tomorrow

Going to be interesting what's MSFT's guidance is going to be. As we saw with AAPL, who cares what you did, more importantly what are you going to do this coming 2008.

I am thinking Microsoft guides lower (like AAPL), unless I am missing something here like Microsoft is a recession proof stock. Anyone have more insight or thoughts?

--Kevin

AAPL: Ok, I admit I gave into Greed!!!

I said I wasn't going to touch AAPL calls going into earnings, but now that they are already out and AAPL took a whooping like no one's business today, I couldn't help myself. I had a little disposal income laying around and these calls lost 7+ points at the opening bell. Sweet thing is that the calls can't really go down much further:

Buy to Open: 10 calls of AAPL Feb 165 at 0.91 <-- down from $8.10 pre-earnings!!!

--Kevin

Expiration Roundup

January 2008 expiration roundup. Oh well :P

Expired: 10 calls of AAPL Jan 200 at 3.05

Gain: -$3050

--Kevin

Sell LULU

Sold these for a small profit. While I am still bearish on LULU guidance (I am sure they will do fine sales reporting wise), the risk here is on Jan 29-30 when the Fed's meet is that the Feds inject some ungodly amount of liquidity into the banks. So even if LULU's guidance stinks, it'll get a temporary pop that will push me that much further from my strike.

Sell to Close: 10 puts of LULU Feb 17.5 at 0.90

Gain: $100

--Kevin

Party Cancelled at Apple: After Hours Carnage

I was hoping that AAPL would pop post earnings, so I could in line for some cheap puts ahead of the drop, but I guess it came early -- no cheap puts for me. Check out the carnage in after hours trading! Down 17+ points for guiding slightly less than what Wallstreet had expected!

--Kevin

Not Touching AAPL Calls ...

Even with the Fed's cutting some interest rates by 0.75 of a point, I ain't touching AAPL calls leading into the earnings. They will probably kill estimates by a lot, there will be a party, but with so much market uncertainty looming, I think being able to time this play properly is going to be tough. I am waiting to see earnings and then decide on my move.

Good luck! And if you're playing today, you've got some serious you know what ;P

--Kevin

Sell MO

Sold those original MO calls to protect whatever profits left. I still like Altria, but it's being beaten down today from continued downward momentum from yesterday. There will be cheaper re-entry points ;P

Sell to Close: 68 calls of MO Mar 90 at 0.15

Gain: $612

--Kevin

Market Overview Article

Actually not a bad article on what's going on with the market. A little on the medium-long side, but very insightful.

--Kevin

90% 4Q Surge: Sorry Not Enough

BlackRock Inc. (BLK) reported 90% increase in 4Q profit and that didn't seem enough to keep investors happy ... or was it? I think hedges just said screw it and took profits, sorry no short squeezing going on here ;P.

http://finance.google.com/finance?q=NYSE%3ABLK

--Kevin

Buying MO

At the end of this blog I said that I was hoping the Fast Money crew would plug MO, and what do you know, the other day they did. That will certainly help my remaining lot of MO calls which have nicely increased nearly 185% since I bought them.

Feeling a little reckless after yesterday's $7k profit pop from AAPL puts, I thought I might look around for some deals related to MO and I found these. Ha ha, these I felt were cheap and I liked the call name too :P

Buy to Open: 100 calls of MO Feb 95 at 0.04 <-- call symbol is MOBS ha ha!

--Kevin

MGH (Market Growth Hormones) On the Way

Looks like Bush and Bernanke want to do something about the US economy, immediately and on a temporarily basis. Depending on how drastic, the timing -- this changes my game plan. If they do something really favorable the put game plan is out the door. Need to watch this carefully especially if it's timed around the AAPL and SPWR earnings.

--Kevin

Analysts Dissatisfied with MacWorld

Here's an article talking about how analysts were disappointed with the lack of a 'killer product' announcement at MacWorld. It's a more focused than my rant about MacWorld, but still along the same lines of thought ;P.

--Kevin

Oracle Buys BEAS: I've got a bridge in Brooklyn to sell you ..

This article talks about how the call options for BEAS 'mysteriously' surged the day before Oracle agreed to buy out BEA Systems. Gee, do you think that maybe the stock isn't a 'fair playing field' afterall ... ;P

--Kevin

Selling AAPL: Grown Men Don't Cry, Unless You're Trading AAPL

Was able to get in front of these:

Buy to Open: 36 puts of AAPL Jan 150 at 0.36
Buy to Open: 64 puts of AAPL Jan 150 at 0.44

Then sell them at:

Sell to Close: 100 puts of AAPL Jan 150 at 1.15

Gain: $7388

Now, I need to go wipe myself ...

--Kevin

AAPL and MacWorld: Making Sense of the Carnage with a Little Help from the Ex

(DON'T GET ME WRONG, APPLE IS A GREAT COMPANY, GREAT STOCK, ALL THE BELLS AND WHISTLES, BUT IN THE SHORT TERM AAPL IS IN FOR A RIDE, HERE'S WHY I THINK SO ...)

As you might have noticed, AAPL got drop-kicked today (-5.45%) and especially after-hours (-3.57%), inspite of the product announcements during Steve Job's keynote at MacWorld which generally produces a nice intraday pop. Here's why I think that didn't happen (with or without the credit/recession worries) and what it indicates for AAPL in the future.

First a little primer. Waaay back, I dated a girl for a short time who said and did some of the dumbest things you could imagine (not quite the calibre of Britney Spears, Paris Hilton or Lindsay Lohan, but still up there). She had this "what can you do for me right now (or in the future)" way about her which I think is pretty stupid socially, but when you're looking at stocks this way of thinking has great merit. Keeping that in mind, let's look at Apple.

• "What Can You Do For Me Now": First, the overall market is in the dumps like someone's bad taco -- everyone knows this. What I think the market was looking from Apple was something new (potential new market) and exciting (potential for high growth) -- maybe help rally the tech sector. Apple announced 'new' products like their upgraded TV product, a slimmer notebook. One problem: if you think about it, there's nothing new there. They just took an existing product, put a shiny, slimmer bow on it and called it a new product. Not that I don't think they will be great products, they most definitely will -- Apple always comes through there -- there's just nothing super duper new, exciting or innovative there. No pop for you Apple.
• "What Can You Do For Me In the Future": Wall Street thrives on rumors and corrects on facts. If you think about it, we already know ballpark what AAPL's revenue story is going to be in the 2008, it's the estimated growth of the laptop and TV market. Ipod and iTunes service will continue to be a strong product for Apple, but I don't think any of these products announced today will 'surge' AAPL's revenue. So there will be steady growth, but no huge surges (with the exception of earnings on Tuesday) in the future.
• Bonus: "What CAN'T You Do For Me in the Future": As a collary to the second point, what these products can't really do for AAPL is generate huge earnings. There's a perceived threat that we're going into a recession, and generally when that happens people go into lock-down mode, spend less and for the most part buy stuff that they think they need. That is they tend not to buy luxury items (stuff they can live without) and spend on necessities (stuff they can't live without like soap, toothpaste, diapers, Internet <-- no joke). Fancy TV device? Well we already have one, or we're satisfied with our current TV solution. Slimmer laptop? Well we already have one, it's already pretty slim ... touch screen phone/music player device? Well I've never seen that before ... yeah I 'need that' ... you get what I am saying.

So imagine you're Mr./Mrs. (you're welcome Karen) Hedge Fund Manager and you had these facts in front of you:

• AAPL didn't create any upward momentum today that will carry into earnings (now)
• The 2008 revenue story is somewhat known with limited potential for explosive growth (future).
• The economy is potentially heading into a recession (risk to everyone's earnings)
• AAPL is already up some ungodly percentage and you're already sitting on massive profits

I'd dump my giant pile of AAPL and take profits now, create massive supply, drive down the stock and pick up more later for cheaper. Which is what I think we've been seeing these past couple days, especially Tuesday.

No doubt that AAPL will crush their numbers and with a good growth story pop after Tuesday's earnings reports. But with recession worries looming and without an exciting growth story I don't think that pop will be able to grow significantly or be sustained in the short term.

Personally, I am looking at puts leading into earnings (if there is a pre-earnings pop) and cheaper puts (with or without a post-earnings pop). What are people thinking about doing themselves as their strategies?

Good luck tomorrow, we'll need it (the Asian markets by the way just took a plunge).

--Kevin

Anti-Climatical MacWorld and RIMM

Keynote was at: http://www.engadget.com/2008/01/15/live-from-macworld-2008-steve-jobs-keynote/. Pretty anti-climatical if you ask me -- not much on the innovation side of things. Anyhow, I guess people were bracing that RIMM would take a pounding (I know I was) from AAPL, but I guess not. Here are some intraday profits:

Buy to Open: 10 puts of Jan RIMM 83 3/8 at 0.27
Sell to Close: 10 puts of Jan RIMM 83 3/8 at 0.37

Gain: $100

Ha ha, don't start celebrating yet, those Jan 200 AAPL calls I picked up a while ago are coming up on expiration ;(. Oh well, looks like I am going to be giving back most of the 2008 profits back :P.

--Kevin

Strategy for Going into the Beginning of a Recession: Not claiming to be the sharpest tool in the toolbox though ...

I was watching the Dallas Cowboy and New York Giants game at the gym today and came to this realization (sorry nothing to do with Tony Romo's girlfriend, Jessica Simpson). Now, probably everyone else but me has figured this out already so no claims to brilliance here, but here goes:

The US has credit problems, and people will look for cheaper alternatives
to feed those spending happens. So they look to discount outlets like
COST. Now, if COST, your discount retail store outlet came just over the
low end of estimates, what makes you think that the regular retail stores are
going to hit their numbers? They probably won't.

So in my mind, this sets me up for a great advantage with buying puts on retails that haven't reported sales or earnings yet. Why because if they do dismal, I gain. If they pop, then that's even better because I can pick up more puts at a discount because while they reported great quarter earnings to warrant a pop, guidance at best is going to be vague because of the credit worries and the fear of going into recession (the market is in denial if you ask me) -- and that pop will soon turn direction and become a steady drop. The only way that I can see a pop being sustained is if the company has absolutely fantastic guidance and earnings like "we invented the teleporter".

If I'm playing the put world then my strategy is to look for retails that are super 'hyped' up right now that haven't reported sales numbers or earnings. That way if they do drop then the drop will be significant and represent the most gain to me. One good way is to look at the P/E ratios, and here's a short list that I came up with along with their P/E's:

TGT: 14.63
WMT: 15.67
COST: 27.10
BJ: 20.80
BBY: 14.61
TIF: 15.28
NILE: 60.79
ZLC: 11.71
CROX: 16.02
UA: 44.81
DECK: 39.75
SKX: 9.97
ZUMZ: 20.41
NKE: 17.97

So the stuff that has a P/E of 20 or less, or have similar P/E's to their competitors -- not interested in. They are properly priced and any gain from downfall will be minimal. The stuff that's well above 30 and trade much more comparable to their competitors, now I am interested. Here are two lists as an example:

Apparel/Footwear:
NKE: 17.97
UA: 44.81
DECK: 39.75
CROX: 16.02
LULU: 134.72 <-- oie!!!

Jewellery:
NILE: 60.79
TIF: 15.28
ZLC: 15.28

So in footwear, LULU, UA and DECK look super attractive to me on the put side because everyone else around them are trading with a much lower P/E and so if they faulter or come in with ok reports and guidance (especially with the fear of recession looming and credit worries creeping into consumer spending), the potential gain on the put side is large. Same with jewellery, especially it being a luxury item, so NILE is looking super attractive to me on the put side (thanks to my buddy Kenneth who mentioned TIF and got me thinking about the jewellery sector over the weekend ...). CROX has a low enough P/E that I am pretty confident that there's no where else to go which is why I have those March 45 calls.

So what I'll probably do is pick a couple companies that have high P/E's compared to their competitors that I feel based on further research that are going to do horribly with sales reports and go into earnings with puts (i.e wait for a good pop day to find cheap puts). AND find companies that I know that have high P/E's that will get pumped up with strong earnings, but really can't provide any sort of future guidance that is resistance to recession/credit worries in order to sustain that pop over the next 2-3 quarters (again, I am looking for the "we invented the teleporter type new" in order to keep me on the call side). Even better, pick the ones that got hyped up by analysts, Cramer and the Fast Money crew, because if their picks do horribly they will either downgrade them or say nothing about them which is great on the put side.

AAPL is another interesting one to think about. I have no doubt they will blow away earnings and what not, but they might also be another good "go into earnings with calls a'blazin then turn a portion of those profits into cheap-o puts a day after or day of the pop and wait for the drop ...".

Anyone know of other retails that have overblown P/E's to their competitors? Anyways, remember I am a total amateur and pretty reckless so would love to hear about other people's strategies. Good luck this month everyone!

--Kevin

Intraday Fun with COST

COST reported earnings yesterday afternoon and came in just above the low-end of the estimates and they popped about $2-3 dollars. Ha ha, since when do you come in on the low-end of estimates and you pop? Soooo, I bought these and traded in the same day.

COST trades at 66.70 right now, so I had puts that strike at 67.5 and I sold them? Let me explain, my biggest risk for these which prompted me to chuck them back was they expire in 1 week and that the Feds do something on Monday potentially and create an artificial market wide pop (hint: more cheap put entry points) -- gobbling up profits. BTW, if they do it something Monday, that would amplify whatever pop AAPL is going to get from MacWorld.

Buy to Open: 10 puts of COST Jan 67.5 at 0.70
Sell to Close: 10 puts of COST Jan 67.5 at 1.70

Gain: $1000

--Kevin

Patterns, Patterns, Patterns ... Facebook Is A Good and Likely Acquisition for MSFT

Brain-farting here, so this is just my thoughts and not really what's happening or will unless ...

I have a friend who still works at Microsoft, his name is JD and he's frightenly smart. You can see some of his works at his blog, his teams website and a tiny fraction of his publications. His specialty is in patterns and practices in various so this one is to you JD.

Pattern: Large company makes a significant investment in another company that is potentially distressed, later to acquire that other company entirely.

As we saw today, Bank of American is to acquire Countrywide Financial and I believe we'll see this with Microsoft acquring Facebook. Here's why this fits our pattern AND makes sense for Microsoft:

• Primer: For one, they are trying to compete with Google, not just on the search frontier, but now the entire Web frontier. One of the two (sorry Yahoo, sorry Al Gore) wants to "own" or be the web and to do that they a majority of the user base (to sell to) and they really need to own the web experience (to keep them coming back).
• Primer 2: It's no secret that Microsoft is making serious efforts to compete with Google. They've already showed their hand, opened up the kimono.
• User Base: Microsoft already made the investment in Facebook, paying them to be the sole advertiser to Facebook users. You could argue that they already have the Facebook user base and that base is not going to grow at a significant rate, but I argue this is not true. Other organizations are starting to their online apps Facebook compatability or have some tie back into Facebook. Blockbuster.com for one sends the movies you queue to your Facebook feed (privacy issues?). Other's are doing the same. So you see, Facebook is different from other social networking apps like Friendster.com, Zoodango.com, etc. in that they can easily leverage other people's audience. Microsoft's AdCenter or whatever it's called could then claim to advertising customers that they have the largest user base or the fastest growing and that's why you should use us and not Google AdSense. Either way, cha-ching $$$.
• Experience: Well the experience is all about rich, connectable content ... Flash is the de facto platform. Microsoft wants its new Silverlight to be the new one, but unfortunately the adoption rate isn't great. Go to Microsoft.com and you'll notice a pop up that asks you if you want to install Silverlight. Microsoft could take over facebook and say Facebook 2.0 uses Silverlight to deliver "the newest and richest features yet" and force the entire Facebook base to install silverlight.
• Potentially Distressed: The founder of Facebook is facing litigation alledging that he unlawfully took code that was contracted for another social networking product and used it for Facebook. If you were him, and had a multi-billion dollar deal now for your product that you *might* lose later, would you take it? Oh hell ya. I think Facebook turned down Yahoo's deal not because the founder doesn't like money, pffft ... it was because Facebook had so much more potential and could fetch a heftier price later, kudos to the Facebook strategy team.

A Facebook acquisition by Microsoft represents an opportunity for them to literally kill two or more mammals (forget just birds) with one stone. With one acquisition, Microsoft can significantly increase the profitability of their ad network service (now) AND increase their strangle-hold and share of the "Internet" (later) with some serious kung-fu grip. What about those people who say "if Microsoft buys Facebook, we're going to stop using it and use "? Oh please, people on average have 100+ contacts per Facebook account -- do you really think that they will take the time to migrate 100+ users from one system to another just because they "used to like Facebook but not anymore because Microsoft own's it now"?

"But Facebook is written in PHP, not ASP.NET, Microsoft won't buy it!". Microsoft has made plenty of acquisitions of products/services not built on their platform, later only to convert them to their platform. Placeware, which became the basis for Real Time Communications (Live Communications server), was purchased as a Java product. Hmm ... another one ... I know hotmail.com! Anyhow, to leverage something like Facebook right now, it doesn't need to be written in any specific language -- it could have been written in Modula-3 (shudders), Pascal, or LISP for that matter -- c'mon this is the web!

Maybe there are better buyers out there? YHOO, GOOG ... actually GOOG might be a good one too ... already people, chime in I want to hear your thoughts!

--Kevin

Oh so that's how CFC was going to be profitable ...

If you follow credit worries, then you may have come across the stories about Bank of America buying CFC. Acquisitions, or talks of them, do not happen overnight and so I am thinking back to the conference call where the CEO of CFC was assuring investors that this quarter was going to profitable knowing that he had a potential out, so why not say promise you're going to be profitable and raise the stock and then dump it. Either way, I doubt the management of CFC is on anyone's good side right now.

--Kevin

LULU: I am scared of the Lemon factor ...

LULU is one of those hyped up stocks that could pop or drop significantly and based on some of the stores that I've visisted they will probably stand out for this round of sales report. Also never underestimate the buying motivation of the female population, credit worries or no credit worries. So taking profits on my puts and looking for cheap call entry points leading up to earnings.

Sell to Close: 10 puts of LULU Jan 30 at 0.5

Gain: $200

--Kevin

SPWR Earnings Release, When and Where

If you want volatility, be sure to check out SPWR's earnings release on Jan 24th, 10:30 PT.

Webcast: http://investors.sunpowercorp.com/events.cfm
Press: http://investors.sunpowercorp.com/

--Kevin

Sell MO

Selling to cover my cost, take a tiny bit of profit and play the rest with virtual profits into the spin off later this month. I'll have about 68 calls left after this. Also I thought this was for sure a lame duck that was going to expire but got a nice plug from Cramer and some analyst, thanks!

Sell to Close: 32 calls of MO March 90 at 0.23

Gain: $50

--Kevin

CFC: Not Worth the Risk or the Reward?

You might have heard a rumor that CFC might be filing for bankruptcy later this week, and thought "wow what a sure fire put play!". I sure did, but then I came to my senses and decided not to. Here are my thoughts:

• Reward: CFC was sweet as a put play when it was 24-18, betting that it would go down to 10. You had at least a 14-8 point gain potential if not more. Now, with CFC priced at less than $6, that most you'll get is 6 points (last I heard stocks down tick below $0 ;P). Read on.
• Risk: Your main risk here if you play on the put side is if CFC does indeed calls it quit and files for Chapter 11. You all of a sudden have puts that are worth absolutely 0. Ditto with calls.

If I am feeling sharp and I've got a quick enough trigger finger, I might try intraday puts on CFC, or far out calls or actual stock for the growth potential. Either way, it's pure spinning the wheel. Since the rumor is stated to be "later this week" Thursday and Friday day might produce some good entry points -- calls/stock might shoot up after trading day Friday if nothing happens. Who knows, what do you think?

--Kevin

Was I Off The Mark or What!?

Looks like I underestimated the downward momentum. Actually my homebrewed momentum model already assumed more downward momentum, but I just got too greedy and didn't bother following it this time (most of the time when I deviate from my own rules and guidelines I tend to lose money, but then again doesn't everyone? ;P).

AAPL: -2.41 points
CROX: -4.61 points

I still don't regret selling the RIMM puts (for now ha ha!).

--Kevin

Purchases from the Stock Sale Today

These ones are pretty risky and sometimes I think I am nuts, but I like the catalysts coming up or the potential upside for each, that plus the Feds need to do something about the market downturn so if they do that means more good news for these below. Without Fed action, they still have good potential:

Buy to Open: 10 calls of AAPL Jan 200 at 3.05
Buy to Open: 10 calls of CROX Mar 45 at 1.75

--Kevin

AAPL vs RIMM

Here's an MSN Moneycentral article on the AAPL vs RIMM debate. It talks a little about how Apple might be making a move into the corporate space.

--Kevin

Sell RIMM: Harder than Kicking a Puppy

Believe me, tossing these back into the water and taking profits from today's free drop from the dismal US job report was hard. RIMM will probably move down a little more tomorrow, but I honestly can't see it dropping below 98. Even if it did, I estimate it would result in about $1000 more profit. Risking $2600 profit for an additional $1000 profit, based on a $900 investment? I think not ;P Plus I think today's drop was a little overreacted (again we're seeing movement on RIMM based on merits other than its own).

Sell to Close: 10 puts of RIMM Jan 100 at $3.55

Gain: $2615

--Kevin

Stocks on Sale Today!

Jobs report was pretty bad, everyone is paying the price. Might be a good day to pick up great stocks for cheap ... ;P

--Kevin

Part 2: RIMM Still Nose Diving, About to Hit Rocks? Probably Not

Kathy made a great comment on the original post and had some really good points. I got to responding to it and decided to put this discussion front and center. Here's Kathy's comments:

I think AAPL and RIMM are inexorably linked. Both are in talks to enter the China market (that will be a new catalyst that could happen anytime). And if AAPL makes some grand iPhone announcement on profit margins or new phone variations, it eventually brings up a RIMM comparison during the CNBC news. The consensus is always that RIMM covers a 'different' segment of the market then AAPL. A business segment that is bigger then AAPL's average gadget geek segment. And that RIMM is available over many different network providers here in the USA and the iphone is limited to just AT&T. Ergo, if apple is doing good rimm should be doing even better. And then they will bring up RIMM's last big earning blow out. And.....bottom line, if AAPL goes up with MacWorld and/or earning news, RIMM won't take a hit and it too will go up.

Finally. BOTH at locked in with the ebb and flow of the overall market. If the overall market makes a move positive, RIMM will make an upward move. For now, I think there is a downward bias until the middle of the month.

As for RIMM, I'm still a buyer. I want to see what the next 'upward' leg looks like. If it waffles and dies. Then that 100 level will look more possible.

As for options. Oh, heck, if you use a bear call strategy, even this price movement makes yah money. In fact, I think options are a better choice then straight stock ownership. Better yet, own the stock and sell some calls. Best of both worlds!

PS for the sake of full disclosure: I'm a card carrying member of the gadget geek segment of the population.....I own an iPhone. It is the best phone I've ever owned. :)

Damn, now you make me want to go out and get an iPhone -- the wife is not going to be happy unless it's for her >:P. I definitely agree with the downward bias on RIMM until the middle of the month, maybe a little bit further -- especially with no real catalyst on the horizon. You could argue the China release could be one but I think that's built into the price of RIMM already. This is how I am justifying to myself why I have those RIMM Dec 100 puts ha ha -- I might be dellusional ;P.

About AAPL and RIMM being linked and the sentiment that if AAPL does well so well RIMM and vice versa. I would agree only if you can draw the line and say AAPL is suited for retail etc. and RIMM is suited for enterprise use. Taken together and separate, the two (especially AAPL) invigorate and help grow the overall industry, so yes if one does well, so will the other because the overall industry will appear to be healthy. But that line is getting progressively fuzzy. AAPL I think is going to make a move into the enterprise space (I think the features in iPhone next gen will speak to that), and RIMM is clearly moving towards retail. So both are trying to eat the other's lunch ;P I might be dead off, but we'll definitely find more with MacWorld keynote.

Speaking of which, during the last MacWorld when Steve Jobs announced the iPhone, RIMM jumped off a cliff because it was initially seen that iPhone was going to trump all phones. RIMM eventually came back to reality when it became clear that the iPhone didn't have the enterprise features that the BlackBerry had -- so hence there was a clear line between iPhone and BlackBerry and the two could thrive hand and hand. This MacWorld I suspect that line is going to get crossed in a major way and RIMM is going to dive back to the 98-100 level. iPhone has the momentum and it's AAPL's flagship product right now (even more than the Mac or MacBook) so I can't imagine why Jobs won't try to milk it. iPod became the de facto media player, so I can't imagine how AAPL won't try to reproduce the same effect with the iPhone as the de facto mobile device and to do that they need to cross the enterprise space.

Finally, I think both companies are worth investing in -- so it's not one or the other. Both companies innovate in a major way, which I have tremendous respect for since innovation is the core of my own business, Impacta.

Thanks Kathy for your sharing your comment! Anyone else want to sound off on their perspective of the RIMM, AAPL game play!?

--Kevin

RIMM Still Nose Diving, About to Hit Rocks? Probably Not.

Looks like RIMM is continuing it's nose dive, it just went below $112.00. Yikes, if you're holding RIMM long, you're probably fine but if you're holding calls then I would be worried, unless I missed some sort of positive catalyst coming up?

Anyways, I was thinking over the break, if I was a hedge fund manager how would I play RIMM? Well end of year 2007 unload a ton of it and take profits (keep investors happy and off my back) for starters. What about 2008, why not load up on RIMM? For one, Steve Jobs will be announcing new products at MacWorld Jan14-18, and if any of those products are in the mobile space again RIMM is sure to get pounded. AAPL will sure to report great earnings so other hedges are going to re-allocate their investments from RIMM (taking profits and create large supply) and positioning it to AAPL. Assuming AAPL does report great earnings, hedge fund managers will allocate even more capital into AAPL to play any residual momentum post earnings, again taking whatever left from RIMM still in the black and moving it into the hot stock de'jour short-term. All these catalysts will/could result in more RIMM stock supply which means cheaper entry points in the short term. There really is no reason for RIMM to rally until AAPL has reported earnings and finished up with MacWorld. That would be my playbook if I was a hedge fund manager and not the founder of a teeny information security startup -- speaking of which, back to work for me ;P

Let me know if you think I am out in left field or not ;P !

--Kevin