Monday, February 12, 2007

Blue Nile (NILE)

There are a bunch of companies that post results tonight including this one. This company is an online retailer of jewelry. What intrigues me is the drop in the stock of this company today. The Feb40 straddle is priced at about 100% above theoretical value implying a large move is expected. Earlier Piper pulled no punches: "we maintain our Underperform rating. We would be more constructive if NILE is able to demonstrate flat gross margins with maintaining near 20% revenue growth." Susquehanna (not related to the hat company) maintained a neutral this morning advising clients to be cautious into earnings. Mind you, a bunch of analysts in recent weeks have been positive on the stock including CRIS, THNK, WBLR. It will be interesting to see how this pans out tonight. Stock down 6% ahead of the numbers.

A quick add on the March NFI puts: I have pared back all but a handful just to have a little skin left in the game. Unless there is major bad news, $15 is going to be strong support.

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