However each of these businesses are facing challenges in their competitive positions in core markets. For HPQ it is the slowdown in PC sales, for RIMM the obvious blackberry 4G concerns linger, for MSFT the acquisition as well as the cloud risks are the overhang… In each of these cases I feel the stock selloffs are overdone and that investors can dip in by selling a January 2012 at the money call option against MSFT and even CSCO and buy the stock in an equal amount. In Rimm and MSFT’s case, I also like selling at the money put options for the January 2012 strikes….

For HPQ, I prefer a calendar call spread, or buying a January 2012 $30 call and selling the June $37 calls… This trade is more of a bet that the stock will stay flat and helps provide an income stream while we wait for the price of the stock to firm up a bit before purchasing the name… I want to see what will happen in the overall markets, and also the back month in the money put should move higher and faster than the front month call, meaning that we are essentially “getting long” some HPQ…

Another way to play HPQ would be to buy 1000 shares of stock and to buy 10 January 2012 HPQ $40 put options… This is a more conservative way to bet on volatility to the upside without risking a significant amount of capital should things not work out for HPQ…

I do like all of these trades, but using options can help to lower risks versus a buy and hold approach, which may be more difficult given slack in the economy. New Autos, ISM Data, GDP slowdown, Housing data, and the lack of more QE makes the overall market a dicey gamble here… so we want to pick our spots and invest with a solid risk averse approach.