PCLN Follow Up

PCLN was posted as a possible short trade on Tuesday May 3rd. Yesterday several members asked me to look at PCLN as a possible earnings play on the short side. As strange as this may seem, my response was that I still liked the short trade, but I didn't see an earnings play setup.

Last night PCLN reported and had a blowout quarter, in after hours I saw PCLN up as high as $550.00. However, I don't think I need to elaborate about after hours indications. Smart money won't be chasing a stock higher in a comparatively illiquid market and they don't chase for the most part. So patience is required before jumping to conclusions based on extended hours trading.

This morning thus far, PCLN is down 1.14% at $528.59, well below the $550 seen last night and below the price at the time of the recent trade idea ($542.47).

We'll have to continue to show some patience and see how PCLN closes, it's certainly showing impressive relative weakness vs, the market this morning.

One of the reasons I favor the PCLN trade would certainly be the risk / reward ratio as the risk was rather low when the trade was mentioned, but also the high amount of margin that has been used in PCLN, a seemingly unstoppable train. When margin calls start to come in, PCLN is one of the contenders to see a massive leverage squeeze. So far, so good.