Last Friday was the option expiration for the month of Sept 2007. One of the trades that made my blood boils over the last two months is Waters Corporation (NYSE: WAT, stock) which I talked about here. Waters is not really my favorite, having disappointed me before. Nevertheless I was sure this stock would continue to beat its estimated earnings on 24th July based on its track record. There was no reason why the strong resistance (it was a very very strong one indeed) of $64 cannot be broken, I thought.
After Waters delivered its earnings of which it beat by 2 cents of $0.60 per share againsts the market estimate of $0.58, it didn’t gap-up as expected. Worst still, it stubbornly floating within the price range of $58 – $64 – refused to break the $64 level. Luck turns for the better on 14th Sept when it finally breached the $64 level and never look back since then registering record 12-months high again and again. If not for the Friday Option expiration on 21th Sept, I would have leave it run as far as possible.
Though my option had lost the time-value, it was compensated with the $4 dollars gain within 6-days of trading since it breached the $64 level. The fact that I bought WAT Sept 60 Call Option means my position has intrinsic value of well over $8.00 a share. And this is the same reason why on the last expiration day, my position still commands 70% profit. If only I’ve time-value, my profit will surely surpass 100%. Anyways profit is still profit and I should be grateful, right? There’s always another trade next time.
Waters is one giant turtle and as I said earlier, you need to have tons of patience waiting for it to hatch the money. Compare to other fast moving stocks such as Google Inc. and Apple Inc. not many investors like to invest in this stock.
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September 23rd, 2007 by financetwitter
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