Trade Alert: Updates on FIO, and our paired trade of WDC and STX

Here’s what I wrote about FIO heading into its report:

FIO’s another long-term bet that I plan to own for a long-time as long the market they are developing continues to grow and they continue to execute. This company is just so new and their product is still so new to the marketplace that it’s possible that they’ll have some missed quarters as sales don’t close on “time”. However, I expect that they’ve had some strong demand and no problem with sales closing although I am more worried that about their ability to scale to meet the demand and service that their products require. I’m holding my FIO calls steady and will buy more if the stock sells off on the report and if my analysis says that the long-term picture remains in tact.

So with sales now looking to be up 75% for the year — not many companies out there are growing their toplines 75% in a year — do you know what I’m doing this morning? That’s right, I’m going to buy a tranche of FIO this morning. I’m going to just buy some FIO common for now. Will look to add to my calls next week.

Meanwhile, our short, WDC, is getting crushed after it’s earnings report. I’m now back to even on the short trade — recall that WDC is part of a “paired trade” with STX, as both make the same product but STX is in a much better place. WDC is down 11% plus right now and STX is down 8% on the day. I’m going to buy a little more calls in STX but not today, probably next week. We’ve made huge money on the STX long which we got into in the high teens as long-time subscribers know, and we’re now breakeven on the WDC short part of the trade. That is what you want out of your paired trades.

It’s Fried-day so don’t let yourself lose focus. There’s still 18% of the trading week left as I type this.

 

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