 |  | |
| |||||||||||||||||||||||||||
Dell total cost $2621. Straddle on Jan $30 strikes, 10 contract on puts and calls. This stock has been a disappointment considering the holiday season. Dell's stock price continues to show lethargic movement while trading below most of the signal lines on the Harmonic Clock. Close out the positions on the Jan Call options for $1.75, option open interest resistance is at $32.50 with huge volume of puts and calls. I don't like theses post split plays because they split the value of options strike prices to $2.50 between strikes. It is hard enough to make money with $5.00 spreads between strike prices. The high put/call ratio of 900 may indicate a surge in buying for the Christmas rally, but unlikely. In fact, last year in Jan, Dell's stock sold off sharply from $42 down to $35 by April this year. If the same thing happens in Jan 06, the put options will be worth $3-$5 down to $25.00. Dell's Aug 12 gap downward on the chart has not been filled, and the next gap down on 11-1 this year has been slowly filled with very little volume. If Dell's stock drops below $29, the gap will be filled on the way downward toward $25 with no high put open interest below the $27.50 strike. Dell's executioner's line is at $30.88, any price below may lead to a sharp sell off with increasing volume. Currently Dell's stock price is falling, wait for sympathy from other computers giving a earnings warning. When Dell's stock price reaches $25.20, close out put positions. This stock has lost it momentum players, the Beta of the stock is at 1.11 and the institutional players should be locking in their profits over the last 3 years from the lows.
|
|
|