Small trade, just getting a toe in the water

Small trade, just getting a toe in the water.

FIO’s in a great position with the cloud and Apple’s initiatives therein and could really be a great stock for the next five years. Here’s how I’d suggest playing FIO into earnings tonight. Unfortunately, the stock has climbed some 8% as the trading day has worn on and the anticipation about tonight’s report, the first since the Barron’s big FIO recommendation, builds. I’d look at buying a tiny bit of some longer-dated out-of-the-money calls and that way if the report is somehow good enough to spike the stock on top of the 8% spike and the big run after the Barron’s report, you’ll have a toe in the water. And if the stock gets killed tomorrow, you can buy some common and/or actually start to build some reasonably-sized call positions. It’s a way of trying to get your cake and eat it too and then to have some more tomorrow. But no, of course, it won’t be easy. Nothing on Wall Street is easy.

I’m gently bidding on a tiny bit of some calls in FIO with strikes from $30 to $35 dated out into December this year and March of next year. They’re not very liquid so I’m probably hardly going to get filled on any of these (especially after telling you guys that I’m bidding on them, which might very well drive the bid/ask up in front of my eyes as this goes out) and I’m going to be very cautious on paying up for them, since this is looking like it’s something I might want to own for the long-term anyway.

Nothing’s easy and let’s remember how hard this can be ahead of time, which can keep us from getting excited which is a good thing because excitement is an emotion, and emotions are the enemy of the successful trader.