My bet was so wrong and this is despite the fact, the chart was telling me otherwise.

I break my own trading rule, and the consequences is I lose money.

The saving grace is I know it is a bet and as such, the position is a small one.

Note to self:

Always follow the trading rules. Be discipline.

Unfortunately, IBM says NO. (Source : http://www.cnbc.com/id/30245898 ).

And there is Chambers (Cisco CEO) who had also highlighted that a deal with SUN is unlikely.

Who else is there that is capable of acquiring SUN. Not many. Maybe Oracle. Unfortunately, the conspiracy theory for Oracle-SUN is so far out that it will take a lot more to spin a decent tale. What would Oracle do with the hardware business?

Where is SUN headed now without IBM? With earnings results just around the corner and a recent layoff during end March…. it seems like a downhill ride for SUN to me.

Source : http://finance.yahoo.com/news/San-Jose-Mercury-News-Cites-iw-14930015.html

FREMONT, CA–(MARKET WIRE)–Apr 15, 2009 — 3PAR® (NYSE:PAR – News), the leading global provider of utility storage, was cited as the seventh fastest growing public company in Silicon Valley in 2008, according to the Silicon Valley 150 list compiled annually by the San Jose Mercury News. 3PAR debuts on the Silicon Valley 150 with a ranking of 122 and 83% growth in 2008 — a year during which one-third of the companies on the list actually saw sales fall.

“Even in a challenging IT climate in which the Silicon Valley 150 companies grew collectively at a mere 5.2 percent, 3PAR continued to win over brand-name customers with our innovative, cost-saving, and energy-saving utility storage technology,” said David Scott, CEO of 3PAR.

The Silicon Valley 150 ranks public companies headquartered in Santa Clara, Santa Cruz, southern San Mateo, and southern Alameda counties on the basis of worldwide revenues (“Sales”) for the most recent available four quarters as of March 31. Most results are for the four quarters ended on or near Dec. 31, 2008.

To view the full article: http://www.mercurynews.com/sv150/

Interesting enough. In the same report, PALM was listed among the TOP 10 for Biggest Percentage Drop and SUN Microsystems (JAVA) is among the TOP 10 for Biggest Dollar Drop.

Southeastern Asset Management Inc. paid a total of $2.13 billion, or an average of $13.25 a share, for its 22 percent stake in Sun, according to a January regulatory filing. A deal at $9.40 a share would mean a payout of about $1.5 billion for Southeastern.

And maybe, that is why the ‘rumoured deal’ did not go through.

Southeastern became an active investor back in October and acquired Sun’s shares at US$13.25 a share. On top of that they have tons of call options at US$10 that goes as far as January 2010.

In addition to the stock holdings, Southeastern’s Longleaf Partners Fund paid $10.1 million for call options that give it the right to purchase 5 million Sun shares at $10 each. Those options, now “underwater,” expire in January 2010.

Hmm… Jan 2010. It is not that far, is it?

Better be careful on this counter. Southeastern may just dump it any time, possible?

Bloomberg article here:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZ9aInPBWMTw

By then, the pre-trading price has already shot up from $4 to $7+.

I have SUN (JAVA) on my watchlist for a long time. 2 reasons for that.

1. Cash
SUN has quite a fair amount of cash sitting around. So, unlike the financial institutes, it has a little bit more strength to weather the storm (and this is back in Dec 2008).

2. Southern Asset Management
These guys announced back in Dec 2008, that they have acquired 22 percent of SUN’s common stock. A substantial amount. There must be things that they know and I don’t know.

Nonetheless, just sitting around and not buying does not help much. And I miss the rally.

However, not all is lost.

For one, I know that such M&A news is never confirmed so early. Secondly, there is always a chance that the M&A does not go through.

So, instead of chasing after the stock on its first rally, I sold an APR 9/8 Vertical Spread. And took my profit the very same day. I choose a spread because it reduces my risk. There is never a sure thing when it comes to M&A talks (and in this case ‘rumours’).

The second chance to make money off SUN comes when it announced job cuts on the last day of Q1 (31 March). The market open and it very soon fall below 7.

This time round, instead of buying option, I decide to just buy the stock. Treating it as a lottery ticket. After all, I am comfortable enough to hold SUN stocks for the long term.

At this moment, the general market is in my favour and the counter has move to about $8 before market opens.

Just keeping my eyes open for any abnormal selling price-volume action.

I’m wondering, how will others trade this counter, if you have miss the first rally?

Your thoughts are appreciated.