This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Pandora Popped, But Will It Crash Again?

Pandora will, without much of a sweat, survive an Apple challenge, but, even if it never happens, persistent Apple rumors and other noise will continue to hit the stock.

My ground rules for owning this type of name:
  • Consider it a long-term speculative play. Define long-term in multiple years, not months.
  • Look away for no more than 10 to 15 trading days, preferably fewer.
  • Allocate no more than 5% to 10% of your portfolio to the stock. How much depends on your risk aversion, size of portfolio, income, etc.
  • Write at- or slightly in-the-money calls against at least 50% of your position.
  • Sell at least 50% of your position on pops (like the one we're seeing now) or simply watch shares get called away.
  • Add to your position on dips, such as the one Pandora just rebounded from.

If Pandora ends up being for real and takes off (I think this happens over the next one to three years), you'll have a starter position you can more confidently add to. If it doesn't, you probably will not have hurt yourself too badly.

Before I became a full-time employee of TheStreet (company policy prohibits full-time editorial staff from owing individual stocks with the exception of TheStreet (TST)), I exited a position in P. Even with a cost basis of $10.19, I closed the position just above breakeven thanks to covered call writing.

You can own Pandora.

If you have well-thought out, long-term conviction when others are bearish, it's the type of stock that can pay off in a big way over the long haul (see, e.g., Sirius).

However, you must not be a passive shareholder. Buy on dips, sell on spikes and write covered calls. Don't go overboard. That type of moderation might keep you from making a killing, but it, more often than not, it will keep you from getting killed.

--Written by Rocco Pendola in Santa Monica, Calif. Pendola is long TST in multiple accounts.
Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.21 -1.10%
NFLX $85.73 -3.10%
P $8.20 -2.40%
SIRI $3.38 -0.44%
FB $99.74 -1.20%


Chart of I:DJI
DOW 15,612.31 -302.43 -1.90%
S&P 500 1,823.33 -28.53 -1.54%
NASDAQ 4,234.8550 -48.7370 -1.14%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs