Home Depot Verrrry Interesting!

[Peter Hansen]

Barrons just had an article on HD and Lowes..... both looked poised to rise ....For the more adventurous a LEAP Call Option ON PFE WHDAI (JAN 45 Call L-08 ) may be the way to go . I use an option analyzer program called the VOLCONE ....and it appears to indicate this option will pop since it is way UNDERPRICED at $2.15

[Tatnic]

Barrons just had an article on HD and Lowes..... both looked poised to rise ....For the more adventurous a LEAP Call Option ON PFE WHDAI (JAN 45 Call L-08 ) may be the way to go . I use an option analyzer program called the VOLCONE ....and it appears to indicate this option will pop since it is way UNDERPRICED at $2.15

HD is loved by the "value" guys but you gotta remember its a cyclical stock and has had a nice bounce already. IMO, options are best left for stocks that are already in a strong up-trend that isn't too far along, (unless of course you are writing calls which is a pretty conservative strategy).

PFE...a 45 strike call that expires in a year? You'd be much better off buying the common and writing that call IMO simply because there's very little chance that pfe will double in a year, and assuming the quote is accurate (doubtful), that almost a 10% dividend on today's stock price, and pfe probably pays a dividend so you'd be making over 10% on your tied up cash. But the stock could go lower from here to...never forget that scenario when playing with options.

[Tatnic]

HD is loved by the "value" guys but you gotta remember its a cyclical stock and has had a nice bounce already. IMO, options are best left for stocks that are already in a strong up-trend that isn't too far along, (unless of course you are writing calls which is a pretty conservative strategy).

PFE...a 45 strike call that expires in a year? You'd be much better off buying the common and writing that call IMO simply because there's very little chance that pfe will double in a year, and assuming the quote is accurate (doubtful), that almost a 10% dividend on today's stock price, and pfe probably pays a dividend so you'd be making over 10% on your tied up cash. But the stock could go lower from here to...never forget that scenario when playing with options.

I see what you meant now...the pacific exchange hd jan.'08 45 strike for 2.15, not pfizer jan. 45 strike, which doesn't even exist.

OK then....here's my take on HD and that option strategy. First of all, hd has been stuck in a wide trading range over the past 2 years...approx. a 10 pt. range, and its now right smack in the middle of that range. For your call to make you any money, hd has to somehow power out of that range and breakout out to multiyear highs, and then for you to break even it has to close at 47.15 in about a year. That's a 17.4% move from here, and its already had a decent 23.5% bounce from the summer lows. That means it will most likely retrace before making another strong move, so you could be another 6 months or so before it even get back to these levels around $40.

So, can it make a 17.4% move in half a year, and that's just to break even.

IMO, you'd be better off waiting for it to either retrace back down, or for it to actually breakout of its trading range, or to just buy the common and write that call. But buying the call alone at these levels is a waste of money IMO and I don't care what you options pricing model says.