I read about Vimpel (VIP) in the January 2008 Smart Money magazine I received today and charted it below to see if the chart agreed with Jack Hough’s theory rooted in fundamentals. His data was from nearly a month a half ago, so it’s already dated (one of the negatives with getting stock ideas from a magazine). The past month has been very good for VIP. While it could always break its trading channel drawn here, I won’t be trading on it until I see it pull back some.
I’m not so confident that I’ll be buying puts at this point or selling naked calls, but I have to say the thought is tempting based on how it has reacted to these two upper lines twice. The better move in my opinion is to enter a limit order for January 30 puts and hope the slight pull back pushes the already high volatility even higher, not to mention the premium increase from being closer to the strike. I’d like to sell puts at a 32.50 strike, but VIP doesn’t have them. 35 could work, but to play it safer in an interesting market, the Jan 30 seems a better move.
The current bid/ask is .35/.45. That’s not close to enough to accept the risk of a deeper fall. Depending on how fast VIP does pull back (assuming I’m correct) I think it could drop $4 easily, if not $5-6 on a faster decline. It will depend in part to how it reacts to the moving averages it continues to close above. I’m putting my order in to sell at $1.00 and will review it again if it drops below 36 and finds support earlier than the trend line.
I’m not saying My Trader’s Journal is the cause, but have you noticed RTN is up more than $3 since I posted about it’s break out two days ago. 😛