Comments on: VMware Earnings Conference Call

By: Ty

Ty — Fri, 26 Oct 2007 20:57:45 +0000

Hi Chris,

you would want to sell out of the Options very soon if you have a nice gain, as Options tend to lose most time value (theta decay) in the last 30 days until expiration. So if there is a dip, they can dip hard. If you wanted to capture more gain, and you are bullish for the next few weeks, you could Roll it forward. Sell these and buy out another month or two. Your broker (like options express or Thinkorswim) may have the ability to just push a button to “Roll” and you pick the month. Rolling is a good way of locking in gains you already have, and then buying more time in the trade to capture more gain with less risk of theta decay.

By: Chris

Chris — Fri, 26 Oct 2007 12:52:23 +0000

Ty,
The calls look great but I am still holding. With expiration several weeks away, what do you think?

The puts are worth nothing so I’ll let them expire and save myself the commission.

By: Ty

Ty — Fri, 26 Oct 2007 03:53:30 +0000

Hey Chris,

nice job on the VM ware play. A nice 10% pop! bet your options did well huh?

By: Eddie

Eddie — Thu, 25 Oct 2007 03:51:23 +0000

I’m just curious, why does AMZN lack of reaction to its earnings affect your decision on vmw? Is it because of what you think the market direction will be?

Also, if you’ve got time, could you explain mathematically or in words how the options reduce your risk?

I’m a complete noob…I have been following for a couple weeks. I really appreciate the articles Chris.

By: Aaron

Aaron — Wed, 24 Oct 2007 22:52:44 +0000

Looks like VMW came through with their earnings report from the third quarter. I do find it strange though that the company said it wouldn’t give a fourth quarter outlook?

By: Aaron

Aaron — Wed, 24 Oct 2007 22:52:44 +0000

Looks like VMW came through with their earnings report from the third quarter. I do find it strange though that the company said it wouldn’t give a fourth quarter outlook?

By: Ram

Ram — Wed, 24 Oct 2007 20:40:30 +0000

Chris/Paul,

Completely agreed with Paul. After AMZN, I am kind of concerned about the pre-play earnings. In fact, today’s price action does not look convincing. It could be due to general market weakness. But I am buyer tomorrow if it breaks out

By: Chris

Chris — Wed, 24 Oct 2007 17:32:31 +0000

Paul,
You are 100% correct as I don’t like these plays either and that’s why I couldn’t go all out with a full 1% risk (I grabbed the cheap puts to protect from max loss in the position).

By: Paul (themarketspeculator)

Paul (themarketspeculator) — Wed, 24 Oct 2007 16:52:34 +0000

VMW is front and center on my watchlist, but as much as I like it, after AMZN I’m hesitant to pre-play earnings. I’ll be buying on a breakout of the old high. If things go according to plan, you’ll have made a nice gain by then