Own the Call Options Instead of the Stock
I have been advocating for the long-term purchase of various large-cap stocks that have continued to trend lower. These businesses have remained solid but the market has lost patience -- a scenario that is always exists in the stock market. Investors will indiscriminately dump shares that are performing below expectations, regardless of what long-term opportunities may manifest. To be sure, often the market is right but that is not always the case. Opportunistic investors thrive by exploiting those exceptions.
Dell (DELL) is an excellent candidate for the purchase of long-term call options. Recently trading around $9, the company's share price has slowly been nicked at as Mr. Market has no patience for Dell's transformation from a PC seller to an enterprise solution systems provider. An interesting point of reference: IBM's (IBM) metamorphosis from a seller of PCs to what it is today was nearly a decade in the making. Big Blue's transformation attracted none other than Warren Buffett as a major investor in the company. Coupled with a stock price that suggests Dell has no future, you have a founder/CEO who has furiously bought shares for himself. The company has also been buying back shares and now also yields nearly 4%....322 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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