SMSI – Candidate for a Strangle?

Bull Trader had a post last week about Smith Micro Software Inc (NASDAQ: SMSI). I commented that it looked like 14 might be the bottom. It hit 14.13 this morning. The Bull Trader comentator got in this morning, but I never put an order in. Now I’m thinking about it again. SMSI fell hard at the opening, but by 10:00 it shook the dirt off and start climbing back up.

This price action supported my 14.00 target for a near-term bottom, but also shows that 16.50 (the high of the day so far) could be a near-term ceiling. I’m debating a strangle on it. If 14 really is going to be the near-term low, I think the June 15 puts might still be worth selling and for the more daring, the June 17.50 calls if 16.50 or even 18.00 is the ceiling.

By selling both options OTM I’d be taking a risk on both sides and at the same time would be reducing my risk with the added revenue recevied from premiums.

Entering a strangle is outside of my normal trading model and I doubt I’ll do it, but will keep it as a thought as I watch the price action the next few days.

More on this topic (What's this?)

Smith Micro Software Inc. (SMSI) Q2 2009 Earnings Preview (Fusion Investing and Analysis, 7/26/09)

Smith Micro Software Inc. (SMSI) Analysis (Fusion Investing and Analysis, 5/10/09)

The Drinks are on the Shareholders (Fusion Investing and Analysis, 5/7/09)

Read more on Smith Micro Software at Wikinvest

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