Why Now Is the Perfect Time to Buy GIGM

GigaMedia just released first-quarter earnings on June 9, and the news was less than stellar. Analysts were expecting to see 9 cents per share, and the company only reported only 8 cents. That's not a huge miss, but profits were down 60% on revenues that were down 13%.

Here's the opportunity: Expectations are extremely low right now. Analysts are only expecting 11 cents per share in the next quarter, and GIGM can easily surpass that benchmark. The company has been very quiet about a number of deals that are on the table and has only admitted that it's in the final stages of negotiating a partnership or sale of its poker and casino software business.

If you ask Nancy Zambell, she'd tell you that the company is the subject of rumors of a possible buyout by PartyGaming, but there is no proof that they are true as of yet. A buyout could be all it takes to make this $5 hot stock a big winner for you this summer.

And trust me when I say you want Nancy's opinion on this stock. Nancy Zambell is the Queen of low-priced stocks. She has a solid record of buying cheap stocks that double. She has two stocks on her Buried Treasures buy list that are up over 130% and three that are up over 50%. She put a buy recommendation on GIGM at the end of April and is targeting a double in the stock.

Now this is where it gets interesting. Nick Atkeson and Andrew Houghton are a superstar options team who run the Big Money Options newsletter. Of their last 25 closed trades, the average gain is 431%. Their biggest winner of the last 25 was a 5,300% gain in Patterson Companies Inc. with a July Bull-call spread.

For those of you who may not be familiar with options, a "call" is a bet that the stock is going to go higher. You essentially buy the option to purchase the stock at a predetermined price but at a later date. You make your money when you get to purchase the stock at a lower price than it is currently trading. If you buy the option to buy GIGM at $10 and the stock is trading at $12 when the option comes due, you get the stock for $10 and can then sell it for a $2 profit per share.

Nick and Andrew are currently recommending a specific October call on GIGM. I can't give you their exact target, but you can probably guess that it's a price that's much higher than where the stock is currently trading. This means that they not only think the stock will hit that price, but they're putting their money on the fact that the stock will be trading even higher than that come October.

One of the reasons the dynamic options duo are so certain that GIGM is on the rise is because…