My short position in VMW went very well. I knew this company couldn't hold at the levels mentioned in the previous post. While the stock drifted against me soon after I sold short, their earnings announcement on Monday crushed it. They met analysts expectations, so what went wrong(right! for me)?

This was a classic example of of the market posting a premium on a star IPO. Every investor is looking for the next big IPO. When they set their estimates, what they really are doing is picking a number that they want the company to BEAT. When young companies can't BEAT their estimates, then the market punishes them.

VMW TradeI sold short at $77.55 on Thursday because VMW had tested it's support 3 times with no signs of a bounce. When I noticed earnings were being announced I was skeptical to hold such a large position because you never know what will happen after an announcement. I bought back half of my position 30 minutes before the close on Monday (earnings day) at $78.89.

After earnings were announced VMW started dropping like a rock in after hours. I watched it bounce off of $62 and then recover to the $67 area once the conference call started. When it went back down to $62.50 I covered the rest of my position in after hours.

Every time I have ever made a move in after hours I have regretted it (except for once with AAPL but that was a buy). It was no different here. I think I played this trade well but should have waited until market open Tuesday to cover. The stock opened @ $58.27 and went as low as $53.57 where it found support. If I would have stuck to my plan I would have covered in the low $50s. Either way I am glad I covered and happy with the trade.

First Half of position:
Bought @ 77.55 sold @ 78.89 = -1.72%

Second Half of position:
Bought @ 77.55 sold @ 62.50 = +19.4%

Success...