My post of about an hour ago, “Yahoo’s big day” convinced me I should put more money where my mouth is on Yahoo’s prospects so using the justifications below I just bought about $1000 in Yahoo March 30.00 calls. (in options “bought” is functionally equivalent to “bet”).
My kilobuck effectively gives me the right to sell 2000 shares of Yahoo anytime between now and March 17. For example if Yahoo falls after today it’s likely I’ll lose *all* of my bet. However if Yahoo rises to, say, $35.00 per share by March 16 I could “exersize” the options for a cool $10,000. Unlikely, but I think the market does not incorporate online advertising revenue and profit information very efficiently. In theory this means … opportunity!Today Yahoo fully launches the new ad matching routine, an artistic program formerly known by the name of “Panama”. My understanding is that if they can even come close to Google’s quality matching ads to searches Yahoo will make quite a bit more.
Yahoo’s a much higher traffic site than Google though Google still has the big search share.
Thus my bet is simple here – that people will realize this week that Yahoo has the *potential* for much higher revenues and profit, and his will bump them up 10+% by next week which would put these options in the money.
Options have “time value” which reflects the chance the stock will go up or down in value and they have “intrinsic”value which is the difference between the stock price and the option price. I paid .52 per share in the hopes the stock price will increase soon. Somewhat counter intuitive is the fact that even a modest increase, if it happens this week as I predict, could double my money without the stock ever reaching the strike price.
CALL YAHOO INC MAR 30
Quantity 20 Contracts $1054
Disclaimer: I also have Yahoo Stock. I could have bought about 40 more shares vs betting on these 2000 shares worth of options to rise quickly. But this’ll be more fun to watch for the next month.
Wh00t Yah00000t! I’m up $120 after 15 minutes. So far this is fun.
Last Trade [tick] 0.58