Patrick's Rants

YHOO has taken off like a shot recently, trading up around $20/sh. I’ve been in and out of YHOO for the past couple of years, but if the price keeps running up it could be time to look for lower cost stocks. I currently have the April 15p originally sold for $0.95 that are trading pretty darn close to my commission free nickle price so I have a good til cancel order in to do just that. The are a few reasons to move to a lower cost stock. First, to get a decent premium on the $15p I have to sell way out in time. The stock being around $20, we get two types of people willing to buy the $15p: Long term hedgers (and who is long term?) or long term speculators. Second, I have about $1500 to work with. There will be minimal price movement on a really far out $15p and the downside protection is not that great – I’m only protected down to maybe $14 on YHOO before I’m underwater. Granted, that’s a $6/30% move from here, but still.

So when the options get bought back or expire (I’m betting on buying to close) I’ll start to look for something in the $5/sh range.