EBAY like EXPE (target 25 to 30) and QLGC (target 25 to 30) or ROOM (target 30) KLAC (30) you need patience. MRVL was a joy as well as the biggest 3 biotechs pigs (GENZ, GILD, and IDPH) which got knocked down but you needed P-A-T-I-E-N-C-E. eBay, is the last remaining vestige of Internet investors and analysts. The company's shares currently trade at about 20 times 2001 sales, 150 times 2001 earnings and 80 times 2002 estimated earnings. The last sector that traded this high was the BIOTECH sector which were great shorts. It was very easy finding biotech companies with NO EARNINGS and subsequently SHORTING them. If EBAY is to hold this price (unlikely) it would have to have some really incredible growth and profitability analysis in its upcoming earnings report.
The target could be 40-50 within next 4 to 5 months but until then might be trading in a RANGE like MSFT and be a great trading stock on both the long and short side.
August 65 or 70 puts for EBAY might be okay but there is no rush. We shorted EXPE at 84 and consequently at every rally added more and more puts,while there was a short span I did nothing. Those that claim to have shorted EBAY made money in their dreams (they either got stopped out the next day or got a few shekels). EBAY did not go down in the "pseudo capitulation" of the nasdaq so it is not likely to go down in any rally.
EBAY might move down plenty but when? The likely time would be after a run up in "anticipation" of a good earnings report and/or after a general "bear flag nasdaq rally". With EBAY you don't want to wake up one day and have it down 6 or 7 points in premarket. You might want to
a) Start a CORE short position in the 65 area if there is a rally and pick up the 65-70 August puts as a hedge and hold through July and probably until August expiration. Like IBM, you might consider picking up the next strike price in EBAY puts consistently IF THE REPORT CAUSES THE STOCK TO MOVE DOWN. If it moves down it will be a replay of MRVL.
b) Buy EBAY long if there is a rally and hedge with the 70 puts or short the 70 calls for August.
The real joke is those that those actually manage to get over a buck on the short side and held overnight only to lose that buck and another buck or two on top of that one.
EBAY is definitely a challenge and its not half as easy as the casual daytrader will make it sound.
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