Bernie's Suite Selection

11/29/2002 12:00 am EST


Bernie Schaeffer

Chairman and CEO, Schaeffer's Investment Research

For those without experience in options, we caution against treading into an unfamiliar area. However, options can be a highly valuable investment vehicle. And when it comes to this specialized field, there is no better guide than Bernie Schaeffer. Through Schaeffer's Investment Research and his Options Advisor newsletter, he is dedicated to providing education, guidance, and advice within this area. Here’s a new recommendation for options traders and holiday travelers.

"Through Internet and telephone operations, (ROOM OTC) books hotel reservations for some 4,500 hotels in 180 markets throughout the Northern Hemisphere. Since hitting an eight-month low in late July, ROOM shares have skyrocketed, gaining 115% and recently hitting a new all-time high. The company has maintained fundamental strength as well. According to Bloomberg, ROOM has issued five consecutive positive earnings surprises.

"Puzzling, therefore, is the continued pessimism checking into ROOM. Our Schaeffer's put/call open interest ratio on the stock stands at 1.86, meaning there are 186 open puts for every 100 calls in the front three-month series. This is an annual high for this sentiment indicator. What's more, only seven analysts currently follow the shares, according to Zacks. A solid uptrend, impressive fundamental results, and a skeptical public equals a ‘suite’ contrarian play. For options players, we recommend purchase of the April 65 call (URDDM)."

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