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Mon Earnings (after the close): PLMO ADBE RHAT (updated)

 
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arthur
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PostPosted: Sat Sep 18, 2004 6:54 am    Post subject: Mon Earnings (after the close): PLMO ADBE RHAT (updated) Reply with quote

Mon Earnings after the close:

Perhaps, a net bullish straddle on PLMO, a net bearish straddle on ADBE, and a neutral straddle on RHAT.

However, the PLMO Oct options are expensive. PLMO closed at 35.60 Fri, the Oct 30 calls closed at 7.40 and the Oct 40 puts closed at 6.10 (the Oct 35 calls are 4 and the Oct 35 puts are 3.30). Perhaps, it's best to write two Oct 35 calls and two Oct 35 puts and buy one Oct 30 call and one Oct 40 put to partially hedge the Oct 35 options.

ADBE options are cheaper with ADBE closing at 48.14 Fri. The Oct 45 calls are 4 and the Oct 50 puts are 3. It may be best to buy twice as many puts than calls for a net bearish straddle.

RHAT closed at 15.23, the Oct 12.5 calls are 3 and the Oct 17.5 puts are 2.80. However, RHAT may not fall below 12.5 or rise above 17.5 on earnings.

So, the ADBE straddle may net a gain with 2 Oct 50 puts (total 6 or less) for each Oct 45 call (at 4 or less) with the bet that ADBE will fall several points on earnings. If ADBE opens high Mon, one put can be bought at a lower price and if ADBE rises higher, another put can be bought. If ADBE pulls back, a call can be bought. If ADBE falls e.g. over one-half point Mon, then a call can be bought and then wait for a bounce to buy a put. 47.50 may be short-term support and the trading range may be 47.50 to 48.50 Mon before earnings





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