GRMN's Gap

A message board friend of mine tipped me off about an option put play for GRMN (thanks SP!). He saw this play from a free weekend newsletter put out by the Investment House Group. To paraphrase the newsletter, they were recommending building a put position using Mar65 strikes with a 41% profit target.

The technical reasoning for this play is that GRMN had a gap in their chart (most stocks revisit most of their gaps) that was tested last week by the stock and the gap failed to close. As a current investor, this play is very interesting to me. Someone has set up a trade, however, that is really not incompatible with my investment (see chart).

I say this because my time horizon is different and I actually would be happy if GRMN stayed here and built a base of support for a few more weeks before heading higher. The best moves are from a technical base. The newsletter also forced me to look at the chart more carefully and see that I should closely follow any breakdown below $62.00 and weigh whether I should lock in profits and buy back lower.

While I don't think that will happen, we should all have a worst case exit strategy. They report on 2/20/08 which may make this put strategy that the newsletter is suggesting problematic. If I where them, I would have bought the Feb puts expecting a move by Friday to avoid the earnings date and limit the premium loss. This is what makes a market.

I like my current GRMN position and expect a move higher in the next 30 days.