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Hi Scott,
You wrote:
"I need some help. I own some cpq stock and also bought some oct 75
options. After yesterday $+3.625 to 77.25 I felt pretty good when I
heard this A.M. that they beat earning expected which is usually good
for a point or two and thenit was going to split and increase its
dividen. this sounded like my Oct. $ 75 option was going to be worth
money. The stock is now down over 2 points What happen? What did I
miss?"
Intel and several other tech stockes reported weeker than expected
earnings. This took the entire tech market down (the technical term for this
phenominin is "throwing the baby out with the bath water").
In the future, if you are going to hold a stock, you might consider
selling covered calls instead of buying them. I don't know when you bought
but you probably could have received 4-6 a few days ago had you sold the Oct
75 covered calls. After today's drop you would still be even to up 2,
instead of being -4 on the stock and -2.75 on the option. The calls will
probably expire out of the money tomorrow so you could do the whole thing
over again using next month's expiration.
If it is any consolation, the Nov 75 Call is selling at 4 (and may
well go up tomorrow), and you still have the stock and hopefully you had a
stop under the option today (you did have a stop order in, didn't you?) So
you can set this up for next month.
Good luck and good trading,
Ray Raffurty
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