VTAL (Vital Images Inc)

VTAL priced a 2ndary offering on Nov 17 at $31.00. The stock traded poorly below this level for about a week as the additional supply weighed on the market. However the volume soon dried up and then the stock began to run up on somewhat increasing volume. On Dec 4th I bought 5,000 shares at $33.03 as the stock broke out of its consolidation in above average volume. I expected that the overhang was now complete and the stock woudl continue its run started in the 2nd half of this year.

The stock took a bit of time and made me nervous that it would not follow through. There were no significant negative signs but the positive movement lacked energy. The calls were attractive so I sold January 35 calls (about $1.00 out of the money) for $1.50. This move eventually proved helpful as the stock has run past 36 and then back down to my purchase level. However I missed most of the volatility because of the call premium and I have a gain in the position even though the stock now rests exactly at my purchase level.

I will watch closely until expiration and if the stock shows much weakness i will not hesitate to turn it out and let the calls expire at a profit.

Jan 25, 2007

I sold the rest of my position yesterday just below $33.00. While i took a loss on the stock portion of the trade, the option premium more than made up for it giving the net trade a gain. I am a bit hesitant to sell as the stock is not performing especially poorly, but it is rangebound and I am looking for areas to lighten up my exposure. I feel it is better to be missing an opportunity than to be missing capital lost to the markets.