EOT Position Update – July 29, 2011

July 29, 2011

  STEC November 2011 $17 Puts

It’s a bad day to be a STEC shareholder… But it’s a great day to own put options on STEC!

Why?

STEC reported second quarter earnings yesterday after the markets closed.  They missed analyst estimates by a penny.  But that’s not the worst of it…

Management slashed their forecast for the current quarter.  Now they’re expecting $70 – $72 million in revenue and EPS of 8 – 10 cents.  That’s a far cry from the $96 million and 31 cents per share analysts were expecting.

As a result, STEC is down about 40% today.  The massive selloff sent STEC plummeting through both of our support zones.

And our put options soared to a peak gain of 229%!

The bottom line is STEC’s in a world of hurt right now.  They’re under investigation by the SEC for securities fraud… And increased competition is eating into sales and profits.

I think STEC will continue falling in the days and weeks ahead.  But at this point, we’ve made the easy money.  All but the most aggressive traders should go ahead and sell to close this trade now.

Congratulations to everyone locking in these massive gains!

Category: EOT Update