Monday, September 28, 2009

How to Profit From the Xerox Crash

Xerox (XRX) is down 18% today on news it is acquiring a computer services company. The printer and copier maker will pay $6.4B, or $63.11 for each ACS share, roughly a 34% premium to Friday's closing price. The move is seen as highly dillituve, out of focus, and basically another blunder for the company.

These situations are ideal for our favorite stategy, straddles. If the move was overdone, the stock will recover. If not, the stock will continue crashing. Potential profits either way, regardless of direction.

Here they are, calculated with our StraddlesCalc V2 tool. We show both an 8-8 straddle and 8-7 strangle.

You can receive technical analysis and alerts on XRX, sent automatically to you by entering the symbol in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due dilligence.

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