iStock_000005265503XSmall-Network-TechThe “Cloud” (or Cloud Computing) is going to kill big servers and other traditional computer hardware manufacturers.

No, it is not. The disk drive business is booming. So the recent selloff in Western Digital (WDC) is a great opportunity to take advantage of an oversold stock and the possibility of selling a weekly put that will net you three-quarters of one percent in a couple of days, more than 35% on an annualized basis.

And, I hate to admit, I like this play because of the chart.

I do fundamentals – and recommending selling puts against stocks I would gladly own at the strike price of the put and I really like Western Digital at $38.

Look at that one-month chart! Even when the market sold off sharply last Friday, the stock hit $38 and bounced like a yo-yo.

WDC-Chart

So, WDC is a cheap stock of a very fine company with great technical support at $38. But you don’t trust the market – for too long. Francois Hollande, the new Socialist president of France, is already getting into it with the Germans, the Greeks cannot agree on the time of day and may have to call for new elections in June.

Long live the cloud, rather, fear of the cloud.

 

 

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