The Volatility Trader
105 W. Monument Street
Baltimore, MD 21201
Wednesday, May 17, 2006
#119
** Comverse Technology Update
Comverse Technology (Nasdaq: CMVT) has been slowly drifting down in price over the last week. We have seen it down as much as 3% in intraday trading, but closing every day down around 1%. The trading has been active, but below its average volume.
This company has some real problems. We don’t yet know how bad the restatement of earnings will be, but if the other companies who have been caught in this option dating scam are any indication, we could see a big drop in this stock price in the next few weeks. They are due to report earnings in early June. No date has been announced.
Our CMVT option is trading at $1.45 to $1.55, and we paid $0.85 for the put. A nice profit, considering how long we have held this trade, but I think there’s more to come. Your mental trailing stop should be at $1.10 – NO HARD STOPS!!
FuelCell (Nasdaq: FCEL) is doing well; we actually had both the put and the call up at one point yesterday… go figure. We don’t know yet which way this one will go, so stay tuned for updates. The magic price on the downside is $11.82. If we close below that price we could see the put have a nice run.
I’ll keep you posted on any updates.
Good investing,
Steve
Current Portfolio:
Option: FuelCell Energy June $12.50 call
Price: $0.70
Comment: Hold
Option: FuelCell Energy June $12.50 put
Price: $1.10
Comment: Hold
Option: Comverse Technology June $22.50 put
Price: $1.50
Comment: Hold. Sell stop is $1.10.
Bi
Before joining Mt. Vernon Research, Steve was honing the skills that make him an invaluable resource for our members. For 10 years, Steve was a professional broker with a prestigious Baltimore based full-service brokerage where he specialized in helping retired and semi-retired investors create and preserve wealth. His firm recognized his work with the elderly when he was selected as a representative to the Clinton Administration’s Council on Aging. Steve is a regular contributor to the Smart Options E-Report and Accelerated Profits Report.
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