Friday, February 2, 2007


Rack dropped another 19% after its earnings report today and looks like a possible IV drop play setting up for a credit spread play.

The only question is will buyers step in here or will weakness continue? I'm considering selling the 15/17.5 calls for a net credit of $1.50 for a 1.5 reward/risk ratio with IV levels at around 59/55% respectively.

If we get some rebounding I might also add the 17.50/15 put spread for a hedge play against the upside.

Will reverse psychology prevail against discount buyers on poor old RACK? Stay tuned...

AMZN Credit Spread Play

Thanks to Adam at Daily Option Report for the idea. AMZN just came out with earnings and the stock has dropped on the news as has IV.

I'm looking at selling the FEB 30/27.50 call spread for a net credit of $1.80 giving a risk reward of 2.5. If we get some continued weakness in the underlying and the IV which are currently at 30/27% respectively we should see premium degradation.

Anyone else game for this credit spread play?

Wednesday, January 31, 2007

GOOG Q4 Revenue Not Enough

Oh well, the EPS of $3.29 beat consensus estimates of $2.91 but the revenue growth rate was 67% to 3.21B which beat consensus estimates of 3.14B but did not surprise. In other words, the revenue estimate had to beat the high of 3.27B in order for the stock to react positively.

GOOG after hours is trading around $486.

Nice try GOOG but not this time. IV will plummet and so will Call premiums. The longs will lose and the shorters will will tomorrow I'm sure.

Since no one made a bet I assume that most did not want to venture into this trap. Wise indeed.

Is GOOG's Growth Slowing?

I wanted to ask all you "swingers" who care about Google (Nasdaq:GOOG) if you agree with this article about GOOG's slowing growth. According to the numbers from GOOG Finance there is no disputing the evidence. The growth rate has slowed.

But my question to you is will this afternoon's earnings report show an uptick on YOY growth?

All place your bets now. Will growth prospects be the catalyst to a sharp drop or decline in GOOG's after hours stock trading today?

Or will the Fed's announcement today overshadow GOOG's earnings report? It's a tough time for decisions right now. Hmmmm....maybe no decision would be the best decision.

I wish all you long GOOG players good luck including myself.