Bought Put Spreads on Electronic Arts (ERTS)

Hello all, I’ve been working on BrokerSense.com quite a bit and traveling so I haven’t had much time to update this site. However, I did put on a new trade this morning:

I bought a vertical put spread on Electronic Arts (ERTS), buying the December $20 puts and selling the December $18 puts. It isn’t a huge trade for me – I’m risking roughly 2% of my capital on this transaction – but I do have a high degree of confidence in it.

September video-game sales were not impressive, and sports games are likely to continue slumping. The reason is simple – sports like pro football just aren’t growing very much, and sports games are being pushed aside for the mega-hot games like Activision’s (ATVI) Call of Duty: Modern Warfare 2.

Money is still pretty tight and only the best of the best will sell in big numbers this holiday season. Electronic Arts just doesn’t have anything in that category.

Tech stocks are also rolling over despite Apple’s (AAPL) monster earnings report yesterday, signaling that the broader market rally could be coming to an end. For companies with perpetually declining earnings estimates, that’s a very bad omen.

Bruce Wasserstein Passes Away

Bruce Wasserstein, one of the all-time investing banking heavyweights, just passed away. The Lazard (LAZ) CEO was recently hospitalized with an irregular heartbeat, though his cause of death remains undetermined.

The question now becomes, can anyone remaining at Lazard fill his shoes? Bruce brought in an awful lot of talented bankers since joining the company but his value couldn’t possibly be measured.

He also leaves behind a legacy. For better or worse, he was one of the architects of the mega-deal age of investment banking in the 1980’s at First Boston, and later, at Wasserstein Perella.

My heart goes out to his family.