Palm credit spread play

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	Palm credit spread play

creditspreads

12-7-2007 10:21 PM

156 views

tags:

credit spread, option trading

creditspreads says:

Too think I just purchased a Palm Treo. I guess my purchase just wasn't enough.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/f24afb22-0252-4824-8766-dafab3b578ba/8332BC17-D1E1-461C-80C1-BD232FD5817B/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://www.bloggingstocks.com/2007/12/07/palm-dives-on-outlook-cut/" href="http://www.bloggingstocks.com/2007/12/07/palm-dives-on-outlook-cut/" style="font-size: 11px;">www.bloggingstocks.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.bloggingstocks.com/2007/12/07/palm-dives-on-outlook-cut/"><SPAN id="ppt1057351">Palm dives on outlook cut</SPAN></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.bloggingstocks.com/2007/12/07/palm-dives-on-outlook-cut/"><A href="http://finance.aol.com/news/palm-inc-new/palm/nas?more=news&from=quotes_news">Palm, Inc.</A> (NASDAQ: <A href="http://finance.aol.com/news/palm-inc-new/palm/nas?more=news&from=quotes_news">PALM</A>) stock is falling this morning after <A href="http://money.aol.com/news/articles/_a/ahead-of-the-bell-palm/n20071207084609990012">the company announced yesterday that it is expecting a net loss of 22 cents to 24 cents per share</A> for the current quarter on sales of about $345 million to $350 million. The company had forecast sales of about $375 million. Analysts were looking for a 4 cent per share profit. PALM cited product delays for the slump in sales.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://www.bloggingstocks.com/2007/12/07/palm-dives-on-outlook-cut/"><DIV>For a bearish hedged play on this stock, I would consider a February <A target="_blank" href="http://www.iotogo.com/HSCS">bear-call credit spread</A> above the $7.50 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make an 8.7% return in 10 weeks as long as PALM is below $7.50 at February expiration. Palm would have to rise by more than 36% before we would start to lose money. </DIV></blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/8332BC17-D1E1-461C-80C1-BD232FD5817B/blog/" title="blog or email this clip"><img src="http://content8.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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