We are going to CANCEL our PALM Call credit spread as recommended yesterday for May.

The Reason:.

Palm, even with its difficulties for the last few years in the smart phone market, Palm has been rumored on and off to be a potential takeover target on several occasions. Several days ago, Lenovo was rumored in having an interest in taking over Palm. Additionally, shares of Palm were up on Friday fueled by another rumor that HTC was a potential suitor and was in discussion with Palm.

The HTC takeover would make some sense as HTC’s business is built around touch screen smart phones for MSFT’s mobil operating system. HTC also made the first G1 Android-based handset and is the manufacturer for Googles Nexus smart phone. Potentially, a takeover of Palm by HTC would give HTC control of Palm’s rival Web operating system.

Even though, an HTC or another potential takeover candidate’s cost would be pricey in today’s market environment, I would prefer NOT to tempt “Murphy’s Law” and be in the position to have a suitor bail Palm out during the next 40 days when we would have a short call credit spread exposed. So,even with a nice % premium on the trade, that premium is there for a reason, so let’s be a little prudent here and pass on PALM.

We are going to just straight cancel the PALM May 7.5/6 Call credit spread. So if you have placed the order for the opening tomorrow please CANCEL the PALM spread at this time. We will be able to replace it along the way with other plays in the near future during the upcoming several weeks. Additionally, if you want an extra trade you have the supplemental trades available as well, but remember we will have additional May trades later after APRIL goes off the board.

So once again, CANCEL THE PALM MAY 7.5/6 Call credit spread from the recommended spreads from yesterday. This will leave us with 6 May positions recommended yestereday (4 call spreads and 2 puts spreads)