EOT Trade Alert – November 2, 2009

| November 2, 2009

November 2, 2009

Trade Alert:

   Buy MOT April 2010 $10 Calls at $0.90 or better (MOTDB)

Company Background:

Motorola (MOT) is a tech company.  They focus on providing technology, products, and services for mobile phones.  They make everything from handsets, accessories, digital entertainment devices, wireless access systems, voice and data communications systems, and enterprise mobility products.

Short-Term Catalyst:

MOT has been down and out for years.  They’ve been hemorrhaging money. Management has been in turmoil.  And, the company has lacked direction.

All of that changed when current Co-CEO, Sanjay Jah, took control of the company in August of 2008.  But the transition hasn’t been easy.

Mr. Jah immediately slashed costs by cutting Motorola’s product line.  He eliminated entire divisions.  Sales fell by a third in the last quarter of 2008.  And, the stock tumbled to under $3 per share for the first time since the 80’s!

The company is refocusing on mobile handset design.  They’ve developed two smartphones being released in the Q4 ’09.  The one getting all the buzz is called the Droid.

The Droid’s development is a joint effort with Google (GOOG) and Verizon (VZ).  It will début in Verizon stores in a few weeks.  It’s going head-to-head with Apple’s (AAPL) iPhone.

I think it’s going to put Motorola on the map as a major player in smartphones.  And that’s a great place to be because smartphones are the fastest growing segment of the mobile phone market.

Motorola’s restructuring is already paying off.  They swung to a profit and beat Q3 earnings estimates.  And that’s before sales of the Droid hit the books.

Needless to say, management is very optimistic about the fourth quarter.  MOT’s shares are already moving higher, but they still have a huge amount of upside.

Trade Details:

Option Ticker Symbol: MOTDB
Underlying Stock Symbol: MOT
Current Bid-Ask Price: $0.82 – $0.85
Option “Buy Up To” Price: $0.90
Break-Even On Stock At Expiration: $10.90
Maximum Risk Per Contract: $90

Exit Strategy:

MOT is trading at $8.89 per share.  Resistance levels will be at $10 and again at $12. Remember, we want this stock to move higher.  Support levels will be at $7.75 and $7. Conservative investors should look to exit at the first support or resistance level. Aggressive investors may want to hold for a bigger move.



Category: EOT Trade Alert

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