Marvel Jun 25 Puts

May 8th, 2007

8 May, 2007 - Today will be the day that will likely determine whether or not this play works out or not. Normally, as I’ve reiterated before, I don’t like holding options through earnings announcements, but since I made the decision to buy in last week, I decided to take a chance with this one. Today before market opening, Marvel reported earnings of $0.56 a share on analyst expectations of $0.35 a share, absolutely slaughtering expectations. As I’ve said many times before, the market doesn’t always react rationally and I’ve seen shares jump on poor earnings announcements and shares drop on record earning announcements.

In pre-market trading, the shares are trading all over the place. However, the key will be not necessarily how it opens up and how it even trades during the course of the day but where it ends up closing. Hopefully we can get some sustained downward pressure in the general market index that can dampen some of the enthusiasm for the great earnings news. If the shares can’t rally on such good news, and we can manage not to get stopped out today, then obviously the outlook for these puts will be bright. Today, I think I’ll just keep a mental stop loss on this position and watch it closely.

Entry Filed under: Option Investing