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

The Holidays Come Early for Red Hat Investors

Red Hat's sales mix consisted of 35% direct sales, with 65% of sales coming from reseller channels. Services continues to grow and increased 10% year over year. Red Hat's model of creating enterprise solutions from relatively free Linux demonstrates how competitive Red Hat is.

I am bullish with Microsoft (MSFT) also, but from a technical analysis review, Red Hat is set to continue higher. The clear break above the widely followed moving averages places the chart into a bullish trend once again. I wouldn't try to chase it, however. A pullback into the $52 to $54 range will give you a much better risk-to-reward ratio in my opinion.

The company doesn't pay a dividend, so consider selling a put option as your vehicle of entry. You will have less risk, and if the shares don't appreciate from the current levels you still have an opportunity to profit. I like the March expiration $50 strike put options before the end of the year if I can sell them for $1.25 or higher during a retracement after today.

I also like the January $60 calls for $1.20 or higher as a covered call for current shareholders. There isn't a lot of time until expiration, and if the stock continues to appreciate your effective sale price is $61.20.

I think the time decay outweighs the potential to miss out on continued gains in such a short time period.

At the time of publication, the author had no positions in securities mentioned.

Follow @RobertWeinstein

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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
RHT $71.45 -1.24%
AAPL $94.19 -1.04%
FB $118.06 0.54%
GOOG $695.70 0.48%
TSLA $222.56 -4.20%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs