The stock and option volatility are in the middle of ranges that show no clear direction for me. I just can’t find myself to be able to hold onto the stock near 36 when I feel a drift to 30 is possible. The July options series is trading at mid 30s vol which isn’t fat enough for me to write against and isn’t cheap enough to buy to hedge the stock. There might be some money for day traders who want to splash around within the recent ranges if that’s your style but that sort of thing is not my bag baby ( in my best Austin powers voice).
Earnings will come out August 4 and this is a real crucial quarter for them. It’s not really the numbers that will be the main focus, but the look forward. When Dick Costelo stepped down a few weeks back, the stock had a knee jerk reaction to almost $41 and snapped 4 points down immediately and did the slow bump and grind back down to lows in the following few days ($33.50). A whole new generation of bagholders were created on this move which will slow down any upside move from here. Lots of others who held onto the stock missed their window to get out thinking” It’s the big one lisbeth” ( in my best Redd Foxx voice) and rode the roller coaster and are still trapped.
Anything is possible from a terrible earnings announcement and forward look which could send the stock grinding as low as $25 or takeout play by Google or Yahoo which could send the stock to $45. I think the latter is unlikely now as there’s no rush to either company to rush to get into this space at this valuation. I see them waiting longer and would rather pick over the carcass of Twitter if things continue to sour.
Seems like there’s easier money to be made elsewhere.
