How to make money on Vonage...

Vonage stock is on its way down, to where we don't know, but the real question is whether they can turn it around.

Competing with cableco and telco isn't going to be enough to grow their business to the levels necessary to justify even their current pricing.
Given a choice between Skype and Vonage, with all the new Skype-certified hardware coming out, there aren't going to be that many people who would choose Vonage for anything other than the payment options (or FUD about Skype and Kazaa)

If you believe Vonage can change their business model to compete effectively with the Next Generation of 'telco' then a Bear Naked Straddle might be fun at the current level!

If you think Vonage is heading downhill towards the abyss of doom, forget the straddle and just go for a bear naked put. You may have to enter pretty low, as there are a lot of naked bears out there!

It seems to me, on a purely anecdotal basis, that Vonage customers use the service because it's cheaper than PSTN and gives them the services they need with minimum hassle. The adverts probably help too!
This really means that they are taking a particular segment of the PSTN population. These people are interested in having something that does what it says on the tin when they plug it in. They are not the early adopters - they already churned to other more interesting services!
The things that will make this newer group churn are poor customer service and intermittent service failure; Oops, isn't that exactly the things that Vonage customers complain about??

Don't you just love options!