Thursday, January 20, 2011

ISRG Surges AH on Earnings Blowout

(UPDATE 1/21/2011)

ISRG went as high as $334.39. I sold my option at $13.60, missing the top dollar at $13.90. Now I could care less if I lose my money on BAC and C... hehehe. Thank you Goldman for being a wonderful contra-indicator.


ISRG (Intuitive Surgical) has always been an elusive stock for me; I can't develop a tradable feel for the stock, the price movement is always radical, both up and down, options prices seem always inflated and not very liquid.

Then, two days ago, a Yahoo SKF board member linked a sell recommendation by the vampire squid, aka Goldman Sachs. (h/t heartless)

It caught my attention because it was a rare recommendation (any "sell" recommendation is rare), and Goldman was recommending 2/1 put spreads on (I think) the front month. Clearly they were expecting a bloodbath in the earnings report, which was today.

Since the vampire squid's forex desk has been a disaster for the investors (they recommended short Euro at the last bottom at 1.18, among other fine calls), I decided to pull up the ISRG chart and see if there's a case against Goldman.

I thought there were. They're in the chart below, but particularly the positive divergence in MACD. And just to test my thinking, I bought one February out of the money call (@330); if I was wrong, I would lose $3 (x100, of course). $330 is where the stock runs into some overhead from May to August last year.

And this is ISRG after-hours:

Never trust the Squid.

Of course the Squid may attack AH or tomorrow to make sure the stock gets beaten back down and I still lose $3.

Again, never trust the Squid.

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