Mama’s got a squeezebox she wears on her chest
And when daddy comes home he never gets no rest
‘cause she’s playing all night and the music’s all right
Mama’s got a squeezebox, daddy never sleeps at night
It’s Friday and you know how we like to play the office tunes as we wind down the week. Today’s classic come from The Who and just like the Doors song from a few weeks ago, Break on Through to the Other Side, we had to play this one today.
We have been following SkullCandy (SKUL, $17.88, up $2.59) all week on our Watch List and we told our subscribers a short-squeeze could be in the works for those betting against this recent IPO. The short interest in the stock is currently at 4.6 million shares which is 12% of the float. This means based on the average trading volume, it would take the short sellers 14 days to cover.
A short-squeeze can happen when the price of stock with a high short interest begins to rebound and gains momentum. A better-than-expected earnings report could cause the short sellers to panic which also adds to demand as they buy shares to cover their short positions. This can cause the stock price to further escalate if shares are hard to find.
There were a lot of traders betting against SkullCandy because they believed the company would miss Wall Street’s estimates or shares were over-priced to begin with. Well, after the company reported a profit, we are seeing a squeeze play out today.
The stock is up 18% but the December 15 calls (SKUL111217C00015000, $3.20, up $2.00) are up 167%. Although we didn’t take the trade that was on our Watch List, we had some happy campers who did.
The company reported a profit of $959,000, or 4 cents a share versus a loss of $1.2 million, or 9 cents a share, in the year earlier period. The best part about the SkullCandy story is that they are just getting started. Once they start hitting their stride internationally, shares could double from current prices.
We have had another good week and please keep your comments, questions, AND the trading stories coming! We love hearing how much our subscribers are making. We are currently riding a 27 trade win streak and we will look to keep it going next week. October was probably our best month EVER and November has gotten off to a sweet start as we have a number of trades approaching triple-digit returns.
As far as the market, the week the bears have a comfortable lead and will probably win the week. The Dow came is currently down 113 points to 11,935 while the S&P is lower by 12 points to 1,249. The Nasdaq is showing a loss of 15 points and is at 2,683.
We plan to continue to play the upside because we think 11,800 and 1,225 will hold on the Dow and S&P, respectively. We have been rather aggressive in this market and it has paid off. You can request our detailed 2011 Track Record to see our closed trade results to get an idea on how hot we are. We will be back Sunday night with our Weekly Wrap and if you are still on the fence about getting back into this market, don’t be. You need to get in, now.
We will also be doing a video this weekend on some possible earnings trades for next week. Some will be listed on our Watch List but some of them won’t be. We will be showing our trading course members how to find candidates for next week and we will be walking everyone through, step-by-step, to see if there is a possible trade in some of the names we are looking at, including chart work.
Remember, you can become a course member at no charge by signing up for a 1-year membership to our Daily publication. The trading course comes with 2 manuals, How to Trade Options on Momentum Stocks and our Momentum Stocks Watch List which list hundreds of different stocks and the sectors they trade in. The course runs for $895 and is included at no charge when you upgrade and the manuals are shipped right to your doorstep. You will also have access to our bi-monthly videos, including the one for Sunday.
If you really want to see how we set up our trades, then this is the video for you. Until then, have a great weekend!]]>