|To all , Chart update: |
The gap from 11/01 to 11/04 17.55 to 17.94 has now been filled (with today's price action).
Some important fib numbers are from the runup which started at 11.37 on 8/28 to the recent top at 20.45 on 11/15 :
50 % retrace = $15.92
61.8% retrace = $14.84
78.6% retrace = $13.31
Most corrective waves go to either of these retrace areas 73 % of the time.
Depending on timing, the $15.00 or $12.50 puts near in time could provide a good entry point.
I like to sell the close to in the money put and then double up on twice as many puts next below. That would get you some stock assigned and raise some cash to help pay for them.
Closest puts (out past the December which expire in 29 days) are now the January's which do not have much time premium and the Februaries.
The februaries may be timely as Cohu will announce their end of year either in late January or early February - very close to Februaries expiration.
My hunch is Cohu will slowly grind down into February and hit that 61.8 retrace and get below $15.00, just as we go into earnings.
2019 can not be expected to be a very good year considering all of the merger related expenses. It should be expected to result in a very high pe multiple with earnings being pathetically low.
Those who follow Cohu will have a completely different view regarding future earnings potential.
So we may well have a last great buy low and hold into accelerated earnings to be opportunistic with.
If price dips below $15.00 and gets in the money, The february puts will be in the money and go up in value on a penny for penny correlation when if price drops below $15.00.
When cohu is close to in the money and it is in the expiration month the bid ask spread is usually ridiculously wide.
Stil if /when price gets in the money you can get some price scalping going on.
All it will take, is a good guidance and we'll roll up to a 2 handle again.
So watch the price action, we've entered a corrective wave and we need to see three waves develop and then see how much more we want to add for a longer ride up into much higher territory.
By February we'll have farther out in time puts to sell for time premium which also can help pay for the 15's/$12.50's in february if assigned. Their should be some august or November puts available by then.
Lastly this Cohu and it is always hard to hold, so we may get lucky and see that 76.8 retrace @13.31.
If so, I'll back up the truck on 12.50's (sell a lot of puts) and use the premium to just buy at the market in the 13's.
I always prepare for the ridiculous worst with Cohu.
There is another gap at $12.42 on 9/04 and $12.82 on 9/05. Selling the 12.50 November puts for 95 cents and buying at the market @ 13.31 = $13.31 - .95 = $12.36 for a neat way to buy below the low of the gap.
I'll keep some powder dry for that great price and scale lightly into 15's and 12.50's.
That $12.36 would be a gift eh?
Just some wishful thinking on catching the last big dip before Cohu proves it has turned the corner.
Really great to see new blood here at the quietest thread on SI!
Buy em cheap friends!!