With earnings announcements on the horizon, the price of the underlying has shot up from 4.20 and change to over 5.50 and back down to close at 4.96 on Friday. As most of you all know I am long 800 shares at 4.87, and short 7 September 5.00 calls, and 1 March 09 5.00 call.
However, with earnings news, volume has spiked, and so has the implied volatility--from 60% to over 116%. Calls that were were a bid ask spread of .1/.15 cents at the beginning of last week are back up to .40/.45.
I was looking to go long a few hundred more shares this last week. It looked like CPSL might be headed for prior support at 4.00 and change (and probably was) until pre-earnings news came out. And for some reason volume spiked from it's normal 4-6 hundred thousand shares traded to 1.2 million. It seems that every time CPSL is in the news it causes some kind of volume price spike. And then it dies off, and so does the price; everyone who got on, gets right back out.
With expiration at the end of this week, I am curious to see what happens. Watch the earnings, and if you aren't long already, don't try and jump abord this stampeed. You will get trampled.
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