Joshua Byrini's Market View
Byrini's obeservations should not be considered recommendations, advice or suggestions to buy, sell or hold securities, commodities, commodity contracts, options, futures, warrants, insurance contracts, real estate, gemstones, art work or derivatives, as he is neither a registered securities, commodities or real estate broker, diamond merchant, art dealer, or investment advisor. These observations are for informational purposes only. In other words, you are on your own chief.Tuesday, October 25, 2005
Computer Associates is in pump mode. Smart Money's tech writer places it at the bottom of the list of software companies that will be taking a haircut this winter, as earnings will show options payouts to all the mooks who'se sweat equity makes the mair go. The bottom means, they will not reflect an earning hit, while 9 out of 10 other software companies shall.
Siting Cash Flow, Barron's has pumped it twice, as a stock that is likely to pop (stating 30% is not unreasonable).
And so, even if you are like Josh, who hates to pay up for stock with sky high price/earnings rations, you might consider looking at the calls, even if the p/e over 250. The Jan 07 calls @30 are up .15 today on a 2.30 position, just as the Jan 07 puts @30 are down .50 on a 3.50 bet.
What can we tell you? I looks like these long island sounds are finding an audience of wise guys, willing to pony up and take a shot. We'd choke it with the longer call. The Jan 07 Calls@35 are .65 cents, and we feel if it works at 30, it will work at 35. There is cashflow, yes, but enough to make the stock "reasonable"?
We're feeling that the answer is "no" now, which makes us look to IBM, with a p/e of 16 and no options expensing overhang problem. It's basically a software company at this point, with many more strong points that this bust out story at CA.
Let's call it a false alarm. Choke CA with the 35 calls and 30 puts.... maybe there is a day's pay there, but we're not expecting much, after a deeper look at its price vs. earnings, however grand the cash looks along side it's peer group. We'd rather not be holding it for a friend on a broad based shake out.
Siting Cash Flow, Barron's has pumped it twice, as a stock that is likely to pop (stating 30% is not unreasonable).
And so, even if you are like Josh, who hates to pay up for stock with sky high price/earnings rations, you might consider looking at the calls, even if the p/e over 250. The Jan 07 calls @30 are up .15 today on a 2.30 position, just as the Jan 07 puts @30 are down .50 on a 3.50 bet.
What can we tell you? I looks like these long island sounds are finding an audience of wise guys, willing to pony up and take a shot. We'd choke it with the longer call. The Jan 07 Calls@35 are .65 cents, and we feel if it works at 30, it will work at 35. There is cashflow, yes, but enough to make the stock "reasonable"?
We're feeling that the answer is "no" now, which makes us look to IBM, with a p/e of 16 and no options expensing overhang problem. It's basically a software company at this point, with many more strong points that this bust out story at CA.
Let's call it a false alarm. Choke CA with the 35 calls and 30 puts.... maybe there is a day's pay there, but we're not expecting much, after a deeper look at its price vs. earnings, however grand the cash looks along side it's peer group. We'd rather not be holding it for a friend on a broad based shake out.
posted by BoxedMerlot # 11:01 AM 
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