Monday, November 26, 2007

CBS - Secular Buy

CBS appears to have completed a secular bear market and should be ready to begin the next leg up.

We are going to purchase options on CBS instead of the stock.

Currently the Jan 08 25 Calls are 1.80 Bid 1.90 Ask, so we should be able to split the spread with an order of 10 or more contracts.

These options are 1 1/8 points in the money and the current option volatility model has them
priced at 1.7988 so they are fairly priced.

I would most definitely pick up a block of them if we see some weakness at tomorrows open and if not, then I would look to put together a line of 20 contract in 2 separate block of 10 as the stock goes our way.

The customary 17% stop for options should be utilized.

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