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EBAY - $42.47

Entry target $40 on breakdown
Entry target $45 on breakout

EBAY rose into the split on Thursday and then eased off slightly. With it currently at $42.47 and resistance at $44 I would love to see a normal post split depression phase where the new shares get moved around. Some traders/investors will sell their new shares and keep the same number in the position as they had previously. Since split shares tend to return to the same level over a 12 month period I question that logic but that is what some people do.

I am going to set a $40 target on the downside for a long entry. However, should the Nasdaq suddenly catch fire next week EBAY could be a favorite at this reduced price level. Therefore I am also going to put an insurance buy stop at $45. If we break resistance at $44 then I want to be along for the ride. If we dip to $40 then we will be in an even better position.

Buy 2006 $45 LEAP Call YRL-AI currently $5.00
Buy 2007 $45 LEAP Call OYI-AI currently $8.40

Insurance put:
Buy April $37.50 Put XBA-PU if entry is at $40.00
Buy April $42.50 Put XBA-PV if entry is at $45.00

EBAY Chart


 

AAPL - $86.73 Leap Puts

Apple is taking no prisoners and rallied over $90 on Thursday. Friday saw some depression setting in as the record date for the split passed. The split date is March 1st and while I was planning on an entry next week I am concerned that there could still be some short covering ahead. Shorts have been beaten badly but they still keep coming back for more. The +10 bounce this week is proof.

I believe a break of $86 could start the ball rolling down hill but I am also expecting a potential Nasdaq rebound on Tuesday. I am going to wait another week before taking the plunge. As always readers know what I am looking for and can jump in early if you want.

AAPL Chart


 

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