SEBL And ITWO Spreads Paying Dividends…
I’m in the midst of a busy travel
schedule, so please pardon the brevity of today’s commentary, as time away from
our Vail seminar to get online has been hard to come by. Denver Friday and
Saturday, Vail today and San Francisco tomorrow. As good as this rally feels,
sleeping in my own bed will be a close second! By the way, if anyone in the San
Francisco area wants to attend our two-hour seminar tomorrow night at the Airport
Sheraton, just surf over to
www.1010WallStreet.com to sign up, or for more details.
From the folks I’m speaking with at our investment seminars, it’s pretty
obvious there has been some real bleeding in the past few months. As bad as the tail end of 2000 was for investors, the beginning of 2001 has been even more
painful. I wish I could have offered more of you good people advice as to how to
play this crazy market, because there certainly are option strategies that allow
you to invest with limited risk and that’s the name of the game!
Take my Siebel Systems
(
SEBL |
Quote |
Chart |
News |
PowerRating) put
spread, posted on March 6. I was talking of a way to play for a bounce in SEBL.
Now, if for traders who bought SEBL stock, they may have been stopped out, or panicked on one
of its many round trips to $25. However, if they sold a $5 put spread, they knew
going in, their exact risk and thus, could sleep at night. So when SEBL sank
down, they weren’t pushed to do anything. They could afford to sit and wait to
see if SEBL did indeed bounce. The stock buyer doesn’t have that luxury.
Likewise, when our computers noted the move in I2
Technologies
(
ITWO |
Quote |
Chart |
News |
PowerRating) last week (April 4), we said investors
might want to take a look at buying the AUG 15 — 22 1/2 bull call spread for $2
1/8. Part of our bullish bent was the chart pattern, but a more compelling
reason was a large institutional buyer of the April 15 calls. Today, our spread
has already doubled our investment and we’ve got plenty of time to see if ITWO
(trading $18.21 at 9:00 MT) can keep up its good work!
