Monday, August 25, 2008

Ibm will it follow the tradition trend

I have been watching Ibm for several years. I have found a consistant trend of this stock dropping 10-15% between aug 5 to sept 30.

since Ibm topped at 129-130 in early august and its down to 122-123 now.

the indicators are that it will follow trend/\.

the second part of the trend is to watch Ibm go up 10% or more between 15 oct to 20 nov.

NOW how do you play this trend on a 100 buck stock

when you only have say 2500 total to spend.

I buy a leap call good till jan 2010

that stock symbol is wibah the 140 strike call good till jan 2010.

I expect to buy around 800 a contract

with 1bm around 111 a share.

Now the difference between me and other people is I will get out when Ibm is 5 bucks higher.

This stock option will increase in value at a rate of 30 cents for every dollar Ibm goes up.

That means a 5 buck uptrend will pay 150 return on an 800 investment

If you spend 2500 you bought 3 contracts.

so you made 450 gross and 420 net if you use a discount broker.

so you make better than 15% in 30 days or less.

thats a decent profit to me.

good luck

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