After exiting half of our remaining position at 22.45, we hold a round lot whose costs basis has been reduced by profit-taking to 11.01. Let’s continue to have fun with this one, shorting one November 24 call (UMUKZ) for 1.05 or better, good-till-canceled. The offer is based on a 24.47 rally target being reached by Monday or Tuesday. I’ve included a snapshot of an option calculator that shows how fair value for the calls was determined. ______ UPDATE: Cancel the order for now, since AKAM hasn’t shown enough moxie lately to reach the target.
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AKAM
We hold 200 shares with an adjusted cost basis of 16.73. Shorting some option premium against them on the last run-up might have been warranted, but having missed the opportunity, we can take encouragement from the fact that Friday’s high slightly exceeded the look-to-the-left peak at 19.46 recorded on the way down a day earlier. _______ UDPATE (October 29, 10:12 a.m. EDT): The stock has opened on a huge gap today. Sell half the position (i.e., 100 shares) now, for around 22.45. A sale at that price would give us an adjusted cost basis of 11.01 for the remaining round lot.
We hold 400 shares acquired on Tuesday for 17.07. (The stock bottomed the next day at 16.76, somewhat lower than the 16.97 stop-loss I’d given, but we canceled it and let the trade ride.) For now, use a stop-loss at 16.62 while offering 200 shares at 17.41. That’s a penny below a Hidden Pivot target on the 10-minute chart, and we should infer that it will be reached if AKAM can get above its sibling midpoint resistance, 17.23. _______ UPDATE (Sep 4, 2:45 p.m.): The stock poked up to 17.50 this morning, allowing us to close out half the position for a small profit. Let’s let the remaining 200 shares (or half of your initial position) ride with a 17.02 stop-loss for now. Our adjusted cost basis is 16.73.
We took a flyer on this stock a while back and lost $200, but there’s a midpoint support where we can try again that will afford us better protection against risk. Bid 17.07 (3 cents above the actual pivot) for 400 shares, stop 16.97, day order.
Akamai’s rally is nearing a level where we might be able to spread off the risk of the four August 25 calls we bought a while back for 0.90. Let’s offer four August 27 calls (UMUHI) short for 0.95, good till canceled. If the order fills, we will have legged on a $2 vertical bull spread for a small credit. It will give us a position with no possible loss, a minimum gain of $20, and a maximum of $800 if the stock is trading above 27 come August expiration. My guess is that AKAM will have to reach $24 (or so) to fill our short offer at 0.95 by mid-June. _______ UPDATE June 21): The stock turned instantly into garbage with last Wednesday’s gap-down opening; however, because it’s due for a dead-cat bounce, let’s try to exit our calls somewhat above the market. Offer them to close for 0.70, good till canceled. Make that offer one-cancels-the-other with an order to sell the calls on a 0.40 stop-limit. _______ UPDATE (6/22 11 a.m.): We exited the calls near the opening, realizing a loss of about $200. The reason we bought the options in the first place was to take a flyer on a stock that Motley Fool had touted as, more or less, the Stock of the Century. The 22nd Century, perhaps. Let’s hope they record the loss, just as we have.
A Motley Fool e-mail promotion that I received yesterday piqued my interest in this former ”cloud” computing hottie, which they rate as the best investment opportunity since Microsoft went public. Coincidentally, AKAM’s recent high at 23.58 created a “camouflaged” impulse leg that looks tempting to buy. Since the stock has already tripped a buy signal for a ride to as high as 24.67 over the near term, let’s try a modest speculation by bidding 0.90 for four August 25 calls (UMUHE), good through Thursday. Our bid is a nickel off recent lows, and I would not advise paying up. _______ UPDATE: We bought the calls for 0.90. Our strategy will be to spread off the risk if and when AKAM rallies, but for now sit tight.
