Assessing Three Pre-Earnings Plays
Heading into earnings I like the Dell (DELL) chart. I said that last quarter, too, I think. It didn't work out quite so well on the long side, but I did hedge that one with some volatility trades. Still, the original thesis was incorrect. So why not try again? Isn't that how it works? It is if you are looking to go broke, but that isn't my reason. DELL is getting to an attractive valuation. Perhaps it's a value trap, but it has a 3.3% yield, positive cash flow and a business model that I believe can turn around. Also, I'm not concerned about any capital gains selling right now.Dell (DELL) –- Daily Source: StockCharts.com View Chart » View in New Window »
My approach into earnings for DELL is to look for the stock to pop back up or over $10. I am a buyer of the November 16 $9.5-10 call spread for $0.22 or less. Also, I am going long 1x November 23 $9 put and short 2x November 16 $9 puts for a net credit of $0.03. I will be a buyer of the stock under $9 as the yield would exceed 3.5% and would pair up well with other old school tech names such as Cisco (CSCO)....191 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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