Option Investor

Trade Alert “ BCSI

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It's Time To Go!

Shares of BCSI are trading lower again today after Roy Jacobs & Associates announced it has filed a class action lawsuit alleging fraudulent statements made to investors by its Chief Executive Officer Brian M. NeSmith, and the Chief Financial Officer Robert Verheecke. The complaint basically claims that the individual defendants projected unrealistic gross margins to boost the company's share value in early 2004.

This news comes on the heels of the SEC insider trading investigation, which is focusing on whether certain present or former officers, directors, employees, affiliates or others made selective disclosure of material nonpublic information, traded BCSI stock while in possession of such information, or communicated such information to others who then traded the company's shares.

Regardless of the outcome of the lawsuit, the "damage has been done" and with today's broad sell-off in equities, it seems prudent to lock-in the remaining gains in the position. We are recommending that traders in the BCSI cash-secured put position close the short options now, for a debit of $0.20-$0.25.

OW Staff

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