Tuesday, December 29, 2009

The case for long LEAP calls

The case for going long on LEAP Calls
  • Massive downturn over the past year
  • Should lead to a broad rally within the next couple of years
  • Lots of company stock prices are sure to rise

  • Identify sectors that have been beaten down and are likely to rise due to mega-trends
  • Find good names in each that have been beaten down but will be in demand
  • Find ones with cheap LEAP Calls
  • Go long: 2012 Calls, < $1
  • e.g. HomeBuilders, Financial companies, Healthcare (esp. related to epidemics which are likely to rise), autos?

Punished sectors likely to rise again: XLF,ITB
- Find the recovery leaders of each sector

Other sectors, stocks likely to rise:
Technology: MOT (handheld computers), YHOO (new CEO), XRX (new CEO)
Disease mgmt/Epidemics
Energy storage/Battery
Transportation

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