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December 27th, 2009 at 2:15 pm
At $18.88 you can sell the Jan $18s for $1.12 which is effectively selling back at $19.12 and, of course rollable. QID fell off a cliff and then rolled to another cliff and fell off that but if retail sales crap out (still not sure from what I’ve read) then it can take off like a shot. You can take a bit more risk by selling the $19s for .60 instead and that drops your basis to $18.61 but does maintain some upside.
At the rate QID has been falling, it’s kind of surprising how cheap the puts are, Jan $18 puts are just .20 and Jan $19 puts are .65. I’m very much expecting a pullback by mid January but this run-up (on no volume) has been brutal to short positions. Of course, shaking the shorts out of their positions is exactly what they do do before a big crash, isn’t it?