Yahoo for YHOO!!!!!!

For once, I was on the good side of a surprise news event.

On Jan 31st, I decided to buy 2 Jan09 17.5 (at-the-money) Call options @ 4.45 on Yahoo (YHOO).
I had read that Yahoo was not projecting good earnings in 2008 because they were putting the money back into long-term improvements for profits in 2009. The stock was at about 1/2 the price it was in late October 2007. I thought this would be a good stock to try some long-term options on for those reasons and that it is one of today’s “blue chip” equivalents.

If I bought Jan09, then that gives the stock time to slowly increase in price.

The next day, Microsoft announced that they wanted to buy YHOO. The option shot up to 11.00
At that point I put a 0.50 trail stop on it.
The options sold the next day for 11.45, a net profit of 7.00

Yahoo for YHOO!!!!!!

It was a big profit on a small trade. But it was a positive trade and a big plug in the leak in the account balance lately.