A number of readers have voiced their concern about holding the Take-Two Interactive Software (NASDAQ:TTWO) position through the quarterly earnings report, which is expected to be released Thursday. While we believe the downside potential is worth the risk, it seems that more than a few subscribers think a sell-off will occur after the announcement. With that outlook in mind, we are going to recommend that conservative traders close the spread now for a small gain and look for a new position (to offset the lost profits) in the coming week.
Another position on our "watch" list is LM Ericsson (NASDAQ:ERICY) and based on today's activity, it appears we may soon be initiating a call-covering strategy to limit losses in the position. As mentioned previously, our initial stop for that order will be near $30.50, which corresponds roughly to a near-term technical "top" in ERICY and is slightly below our cost basis in the original position. Traders who are unfamiliar with this technique should refer to the strategy narrative posted in the MCM Portfolio on 2/15/05.