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The Buy List – Q1 2010 (Members Only) – Update

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Maybe this time we can actually do some buying!

Back on Jan 9th I posted the last update to this list but said: "Fundamentally, I still don’t buy this rally but, technically, we could go up and up from here" - Not exactly a ringing endorsement and we have gotten at leas the first leg of our technical correction.   Rather than hitting our list we ended up dumping our longs into the rally and I’m not really convinced about next week either.  So far, we’ve stuck to buying blue-chips that we didn’t even think we’d get a good shot at when I made this list.  It’s all about holding that 10,000 line on the Dow now, there is no more room for error to the downside of the markets or we may be seeing 8,650, not 9,650 again.  Last time we looked at the market moves as they compared to 2004 and I noted that 2004 was a choppy and downtrending year – notice how similar our pattern is working out at the moment!

Obviously we can’t rely on patterns to simply keep repeating themselves.  We could have another terrorist attack, we could have more stimulus or maybe both in our future but, until we see the patten broken, we can play for a similar move to what we see in early 2004.  Our buy/write strategy is ideal for this as it’s a conservative play that gives us 15-20% downside protection.  Combine this with our usual strategy to scale into positons along with some sensible disaster hedges and we can build a nice, bullish virtual portfolio for 2010.  Keep in mind we don’t fear the upside with buy/writes as our "worst case" there is we get called away with a nice profit.  

These are the bullish plays that form the bulk of our virtual portfolios and that sometimes gets lost in our weekly short-term trading.  It was a lot like shooting fish in a barrel, picking winners from our September 6th Watch List (we had our last Buy List on July 11th our first since the bottom in March).  As always, our active lists are found under the Virtual Portfolio Tab near the top of our pages - always check there for recent updates.  Keep in mind that we are just now getting near to where we were on September 6th, when I last felt it was a good idea to start bottom fishing (and Thanksgiving was the last update to that list as, from that point forward, we thought the whole rally was BS and not suitable for long-term investing. 

We did very well back then BECAUSE we took well-hedged positions and scaled in slowly!  Changing a Watch List to a Buy List is a big deal as we are saying (and this goes for as long as we hold our breakout levels) that we are confident in these positions long-term and are willing to add to them on the dips.  I had been WISELY reluctant to switch signals until we actually broke though and my call to remain cautious through Jan expirations saved us a boatload of heartache.  Do not expect me to go on a buying frenzy next week, these are still uncertain times but uncertainty means we don’t know that it’s NOT going up – so it’s prudent to take some bullish positions regardless of what goes on otherwise.  Just make sure you pick the ones you REALLY want to DD on when they drop 30%!   

All of these stocks are ones I like and they are good for any virtual portfolio.  Anytime you see one falling though, that’s the time we want to take a closer look to see if we have an opportunity to jump on something we like while it’s on sale!  Bold items are ones I think have a good entry as of this posting date.

AET (12/21 – $34.04, 1/9 – $32.70, 1/31 -$29.97) Health Care is up in the air but this is a nice opportunity on this stock.  AET is cheap with a good cash postion and a p/e around 11.  Last time out we went with the 2011 $25s at $9.65 (now $7.30), selling the Apr $33s for $2.50 (now .45) and the Apr $30 puts for $1.50 (now $2.05) so that was BRILLIANT!  I also liked the 2012 $25/35 bull call spread for $5, selling the Feb $35 calls for .90, saying: "If you get away with 5 of those sales in 2 years, it’s a free $10 spread!"  That spread is now $4.50 and the calls are .10 – see how these things work!  You can replicate the last trade with the 2011 $22.50s at $9.10, selling the Apr $30s for $2.10 but this time I’d hold off and sell (not buy) the Apr $27 puts at $1.75 if AET continues down to the 200 dma at $27.50.  Don’t forget, you have to REALLY want AET long term!

AGNC (11/24 – $26.20, 12/21 – $27.91, 1/9 – $26.50, 1/31 – $26.69) is (gasp!) a REIT.  But it’s a strange one that (according to them) "Invests in agency pass-through securities and collateralized mortgage obligations for which the principal and interest payments are guaranteed by a U.S. Government agency or a U.S. Government sponsored entity.  The company funds its investments primarily through short-term borrowings structured as repurchase agreements."  This $26.50 just paid a QUARTERLY $1.40 DIVIDEND (21%) on Jan 29th!  Best to see if they pull back a little now but totally great if you are in them from last time.   

ATVI (11/24 – $11.40, 12/21 – $10.91, 1/9 – $10.90, 1/31 – $10.16) Owns WarCraft, which is the 2nd biggest monthly on-line game revenue producer behind SNE’s Everquest.  Having a monthly subscription base sees them through rough times and they have had their growth halted in China as they switch distributors, which should be finished by the fall.  Now that we are at $10, I still like selling the 2011 $10 puts and calls for $2.70 for a $7.46/8.73, a nice, mellow 34% gain if called away (see Jan 9 list for riskier 257% play)

AYE (12/22 – $24.04, 1/9 $22.99, 1/31 – 20.95) Pays a 2.6% divdend and are trading back at their lows.  Our last entry was the July $22.50 puts and calls at $3.50 nets $19.49/21 so more like a wait and see here but July $22.50 calls are .80 and should be stopped at $1 (.25 trailing). 

CEPH (12/21 – $59.75, 1/9 – $63.01, 1/31-63.84)  We’re on track with our 2012 $50/70 bull call spread that was $9.50 and is now $11.50 but still worth offering $11 for.  We paired that with the sale of the 2012 $50 puts at $6, now $4.40 so the new combo would net $6.60, almost a double from the $3.50 of our original spread but still with plenty of upside and, of course, more in the money now.   

CPLP (11/24 – $7.54, 12/21 – $8.80, 1/9 – $9.82, 1/31 – $8.93) is an all double-hull tanker company that pays a nice dividend (21%).  They are up 18% from our November entry and last time I said we’ll have to hope for a pulback from $10 and we got it but if you didn’t get in on the dip down to $8.18 last week, they are less sexy here.  Selling naked June $10 puts naked for $2.60+ ($3 would be great) is not a bad long-term entry.

CUZ (11/24 – 7.06, 12/21 – $7.77, 1/9 – $8.15, 1/31 – $7.66) is another one that shot up on us and now pulled back.  They are a REIT that took some write downs and is raising capital and that took them from $10.95 in Aug down to $7.50 later in Aug, now back to $7.66.  They are not in a bad spot for a conservative play, selling the July $7.50 puts and calls for $1.90 for net $5.76/6.63.  They cut their dividend to .36 for the year but that’s over 5% of $6.63 if it holds but consider this one a gamble for sure.

DF (12/21 – $17.68, 1/9 – $18.23, 1/31 – $17.63)  Whatever the economy, people tend to eat and DF supplies the basics.  They haven’t been lower than $11, even in the Nov crash and by March they held steady at $18 so a nice, mellow buy/write, selling the 2011 $17.50 puts and calls for $4.20 nets $13.43/15.42, which is a happy 30% if called away.  You can also get more aggressive and do it arificially with the 2011 $12.50s at $5.50, with the same sale, which is net $1.20 on the $5 spread for a 216% upside if called away.

ENP (11/24 – $18.02, 12/21 – $19.70, 1/9 – $20.76, 1/31- $20.22) is a nice little E&P operation that we first entered at $16.50 and they went ex-dividend on 11/5 at $19 and were back to $17.50.  They were a tough buy at $19.70 but selling the naked Feb $20 puts for $1.35 was a nice then and those puts are down to .70 already.  Here’s my thought on this one as it’s gone up so much – Rather than commit $2,026 for the stock to get a $100 dividend between now and June, how about buy the Sept $17.50/20 bull call spread for $1.40 and sell the $17.50 puts for $1.30 and that’s net $10 with a $250 payoff at $20 or THEN you end up owning the nice, dividend-paying stock for net $17.60 so we either get our $240 profit by Sept or we get a 13% discount on the entry.  According to TOS, they only want $200 in net margin for the naked put sale so that’s nice

ERTS (12/21 – $16.96, 1/9 – $18.40, 1/31 – $16.28)  Oops, they blew earnings but the 2011 $12.50/17.50 bull call spread at $3.20 is STILL $3.78 in the money at net $2.70 so a loss of just 15% depsite the awful drop.   $16.90 was our target entry selling the March $18 puts ahead of earnings and I still like these guys long-term.  Assuming you end up in the stock at $16.28 or you take a new entry here, I like the buy/write with the June $16 calls and June $15 puts at $2.75 for net $13.53/14.27. 

EXC (12/22 – $49.10, Jan 9 – $48.30, 1/31 – $45.62) Back at $49 I had said: "This one is a real watch item as we’d like to see them test the 50 dma at $48 first and then likely an entry by selling the Feb $50 puts for $3.50 or better."  My logic was: "The lack of climate agreement will disappoint a lot of speculators so let them exit and then we are left with an energy utility that pays a 4.2% dividend."  Now the Feb $50 puts are $5 with 3 weeks to go, not much premium so selling July $45 puts for $3.10 is more attractive.  Also the 2011 $40/50 bull call spread at net $4.90, selling the $40 puts for $2.70 puts you in at net $2.20 on the $10 spread with a put-to price of $42.20 with Obama looking to fund nuclear energy projects

FLY (11/24 – $9.10, 12/21 – $9.17, 1/9 – $10.58, 1/31 – $9.61)  They’re back!  I was upset last time that they got away so quickly as they have a great business leasing aircraft and their competitors have a lot of troubles, which should help them long-term.  No options on these guys and we’d like to get them for $8.50 but I doubt it so entries (20% scales) of 1x at $9.50, 1x at $9 and 2x at $9.50 averages $8.87, which is close enough for a long-term play and, of course, $10.50 is around where we look for the exits again.      

FTR (11/24 – $7.83, 12/21 $7.56, 1/9 – $7.68, 1/31 – $7.61) is a CT-based phone carrier that pays a REALLY nice 13.4% dividend.  The stock is $7.61 but the contract prices are very lame, with the Aug $7.50 puts and calls just $1.25 but we don’t mind owning them long term at net $6.36/6.93 as long as they are paying that $1 annual dividend (14% on that basis!).

GENZ (12/21 – $47.95, 1/9 – $53.81, 1/31 – $54.26)  Oops!  That one really got away this month.  I think with these guys we can now just hope they get rejected off the 200 dma at $54 to set up a new entry.  If they refuse to lose and establish a new floor, we can deal with that later (if someone reminds me in chat).  $55 has been giving them trouble so far.

GLW (11/24 – $16.53, 12/21 – $18.98, 1/9 – $19.89, 1/31 $18.08)  I said in November: "All the things that are selling:  Laptops, phones and TVs have one thing in common – glass!  That’s half their business and the reason they were a favorite of ours last fall.  Now they have more than doubled but the other half of their business is fiber so I think they have room to double again. " 2011 $17.50 calls are now $2.75 and you can sell March $18 puts for $1 for net $1.65 and we’ll hope to sell March $20s, now .30, for $1 on a move back up.  I’m thinking the recent sell-off was a gift entry on these guys but some is legitimate disappointment that they didn’t supply IPad glass.  

GME (12/21 – $22.62, 1/9 – $20.29, 1/31 – $19.77)  This is a fun one.  GME cut Q4 outlook from $1.60 to $1.25 a share and the stock tanked to $19.42,  recovered and now gave it back again.  Last time I said: "Q4 is about half their sales so let’s call it $2.50 for the year – that doesn’t really bother me with a $20 stock…"  Gel thinks MSFT may buy GME.  I don’t think so but rumors are always fun so let’s call this one worth risking with the 2011 $17.50/25 bull call spread for $3 and sell the 2011 $15 puts for $1.20 so we’re in the $7.50 spread for net $1.80 with a 316% upside at $25 (their 200 dma) and a put-to price of $16.80 (a 15% discount from here and back at last November’s spike low).

GOOG (11/24 – $583, 12/21 – $598, 1/9 – $602, 1/31 – $529) Last time, I liked buying 4 June $570 calls for $63.50 ($25,400) and selling 5 June $600 calls for $46.70 ($23,350) – net $2,050, which was meant to be profitable from about $575 to $700.  The June $570s are now $20.10 ($8,040) and the June $600s are $11.90 ($5,950) for net $2,090 -pretty amazing considering it fell $100 rather than went up like we expected.  That’s the power of doing these conservative ratio spreads – they are very tricky to figure out the best math but, as you can see, they give you TONS of room for error!     

GOOG (11/24 – $583. 1/9 – $602, 1/31 – $529 ) my play for those of you not inclined to watch so closely was the 2012 $700s are $62.50, selling 2011 $660s for $44.50, which was net $18.  The $700s are now $30 and the $660s are now $16.50 so net $13.50 but we have a year so I like this spread as a new entry or you can be more aggressive and sell the $630s for $22.  Certainly a $3.50 trailing stop (20% of the gains) should be set on the callers and $7 rolls you down to the 2012 $670s, another fine adjustment ($30 for $7). 

GPW (11/24 – $25, 12/21 – $25.16. 1/9 – 25.03, 1/31 – $25.02) is a nice little (and I emphasize little) power company that pays a 5.75% dividend on $25 shares (no options).  The kicker for them is they MAY qualify for state aid in building their new plants as they continue to expand and that could give them a boost as would an acquirer paying just a fraction over the $250M market cap.

Notice that many of our virtual portfolio trades are REITs and energy companies.  While I feel that REITs are in big trouble and commodities are overpriced, they make good offsets to our more speculative downside plays on SRS, OIH or ERY.  This is a very important part of virtual portfolio balancing, selecting a mix of stocks to offset your bearish ETF betting or vs. vs. so you are not likely to be ALL wrong when the sector moves one way or the other.  In general, since I am pretty bearish on the economy, I like stocks that benefit from me being wrong on my macro view.  These are, of course, also stocks I don’t mind being "stuck with" long-term, just in case my macro view turns out to be right. 

INTC (11/24 – $19.39, 12/21 $20.09, 1/9 – $20.40, 1/31 – $19.40)  Last time I said: "The SOX are up 100% since March and that would be $23.50 for INTC so you have to like them at $20.09.  But the VIX is too low and there are no March calls yet so this is not the best time to enter them."  Now you can see exactly what I meant by that statement as our patience paid off and we can now buy the stock back at the November entry and sell Apr $19 puts and calls for $2.30 for net $17.10/18.05.  It’s a nice 11%, 3-month profit if called away and a 7% dicount if put to you.  That may not sound sexy but this is Intel – not some rinky-dink company that you’d be ashamed to own in 2020!  You can make this play more sexy by going artificial, taking the 2012 $17.50/25 bull call spread for $2.75 instead of the stock. 

KEY (12/21 – $5.72, 1/9 – $6.50, 1/31 – $7.18) Wow can I pick banks!  Up 25% from our original pick is a lot but not in the grand scheme of things.  On 1/2 we added the 2011 $7.50 calls at .85 and are now $1.25 for a quick 47% in a month and are still not a bad speculative upside play.  You can even add selling the 2011 $7.50 puts for $1.60 and you are still in for net $7.10, which is your break-even on the trade

LMT (12/21 – $76.27, 2/2 – $74.89)  Defense is down on fears the wars may wind down one day but there’s always a war somewhere and F16s are the most popular jets sold to our International Allies (they are even cleared to sell to crazy countries like Pakistan).  LMT pays a 3.4% dividend and has a p/e of about 10 compared to 11 for RTN or GD.  While the dividend is nothing to sneeze at and can be capured with the sale of the 2011 $75 calls for $6.30 and the 2011 $65 puts for $4.10 for net $64.46/64.73, I really like the 2012 $60/80 bull call spread for $10.40 offset by the sale of the $60 puts at $5.60 which is net $4.80 on the $20 spread – a great play for PM accounts

MBI (12/21 – $3.64, 1/9 – $5.32, 2/2 – $5.19)  Same as last month.  Up 40%+ is pretty much the definition of getting away BUT if you buy the stock for $5.19 and sell the Aug $5s for $1.25 and the Aug $4 puts for .55 that’s still net $3.39/3.70 so cheaper than 3 weeks ago and you can make 47% if they just hold $5 through August.  Another way you can play this is the 2012 $2.50/7.50 bull call spread at $1.75, selling the $5 puts for $1.95 which is a net credit of .20, yet you hold value at $2.50 so the break-even is $3.65 (down 30%) with a $5.20 payout at $7.50.

MON (12/21 – $80.97, 1/9 – $86.65, 2/2 – $77.31)  I’m close to dropping them but I would buy them back in the mid $60s so they’ll stay on here.  Very wise last time to say out of them but, long-term, this is a nice company to own.

NDAQ (12/21 – $20.03, 1/9 – $20.23, 2/2 – $18.42) Low volumes make the exchanges less sexy but NDAQ has good growth and will do better if people come back into the markets over the next few years.  Last time I predicted: "I’m confident enough they’ll hold $18 that the 2011 $15s for $6.20 are attractive, selling the March $20 puts and calls for $1.10 for a net $5.10 entry on the $5 spread, which is a nice way to start."  The 2011 $15s are now $4.60, which makes them a great deal and I like selling the June $18 puts for $1.35 and waiting on the sale of the June $20s for at least $1.25 (now .85).     

NLY (1/9 – $17.53, 2/2 – $17.45)  As you’ll see in the comments on the last update, AJbcfa likes them better than AGNC for very good reasons.  NYL is another REIT that pays a lovely 17% dividend and they just firmly tested their 50 dma at $17.35 so we like the entry here at $17.  I like the buy/write with the 2011 $17.50 puts and calls at $4 for net $13.45/15.48 but keep in mind the danger is – if they cut the dividend, the stock drops like a rock and you are doubly screwed.  Last month we deconstructed this play and found a better way to make $3 than holding the stock for dividends but the sellers have wised up and jacked up the vertical prices (making our old play a winner already) so it’s no longer valid as a new entry.  

NRF (11/24 – $3.42, 12/21 – $3.27, 1/9 – $4.19, 2/2 – $4.55) is a small REIT but a lender, not an operator and they are based in NY dealing with mainly corporate clients so, hopefully, based a little steadier than most.  In December I said: "They are at a bad spot for options right now at $3.27 as they only have $2.50 and $5 strikes but even the 65% reduced dividend of .10 is 11.4%.  The company has $260M in cash and $3.3Bn in properties (never trust those values) with just $1.9Bn in debt.  They do keep selling stock to raise cash and A/P has run up and bears watching so this is a scale-in but they could easily double up if CRE really does recover."  On Jan 9th I said: "An aggressive way to play is buying the June $2.50 calls for $1.70 and selling the June $5 puts for $1.25, which REALLY screws you to the downside but I’m sticking with my $5 target and then we can sell the $5 calls for about .75 to drop our net to a $1.15 credit, which has a b/e down at $3.18."  Check out this chart – sometimes I amaze myself.  8-) 

NSM (12/21 – $15.26, 1/9 – $15.26, 2/2 – $13.68)  At $13.68 they remind me of that song "I Love You More Today Than Yesterday."  Our last entry was the 2011 $12.50 calls at $3.70 (now $2.50), selling the Feb $15 calls for .85 (now .10) and the May $14 puts for .75 (now $1.30) so a big fat loser so far and I like the Leap and the put leg still, waiting for a bounce to collect at least $1 for the May $15 calls (now .55), which makes the leap just net .20 and your worst-case put-to price net $15.20. 

ORCL (11/24 – $22.14, 12/21 – $24.43, 1/9 – $24.68, 2/5 – $23.11) is up "just" 50% off the bottom but MSFT is up 100%.  ORCL has a slightly lower p/e than MSFT and they have yet to realize gains from their buys of PeopleSoft, Siebel and BEAS (who we had played as a bargain before they got snapped up).  They are also buying JAVA which will turn them into a total solution provider so I like them long-term.  The 2011 $20s are $4.40 ($1.30 premium) and you can sell March $23 calls for $1.05 and March $22 puts for .55 for net $2.80 on the $3 spread with 9 months to roll.

PCS (12/21 -  $7.55, 1/9 – $7.10, 2/5 – $5.81)  I like these little telcos and this one is in the fastest growing part of our country (Texas) and it’s sort of a side bet on smart-phone mania as all these phones increase the revenue per customer for the service providers.  They are currently in a price war with S that is killing the stock so it’s a long-term play and now near our DD target of $5.50.  Buying the stock here and selling the Jan $5 puts and calls for $2.40 is net $3.41/4.21 - a very nice entry for a company that makes .40 per share!

PDS (11/24 – $6.80, 12/21 – $7.18, 1/9 – $8.72, 2/5 – $7.79) was having a rough time after halting their dividends, which used to be over $1 per year and I said back in November that they may have expanded too much at the top but they make a nice speculative play.  Our original play for March is on track to make 67% and now we have Sept contracts so no need to get fancy and we just sell the Sept $7.50 puts and calls for $2.50 for net $5.29/6.40 and a nice 42% if called away.

PGH (11/24 – $9.70, 12/21 – $9.64, 1/9 – $10.38, 2/5 – $10.42) is almost always our value lists.  They are a Canadian trust that pays a MONTHLY .07 dividend.  You’ve gotta love the lack of movement here in a downturn too!  At $10.42, the VIX has finally improved and we can sell the July $10 puts and calls for $1.65 for net $8.77/9.39.  From ‘04-’08 dividends were around .20 per month so a nice set and forget in the long-term virtual portfolio once you establish a good position.

PRM (11/24 – $3.20, 12/21 – $3.93, 1/9 – $3.60, 2/5 – $3.15) hit our offer last time at $3.40 (see last update) and have spiked very close to our DD target at $2.40 (there are no options).  They make those little free apartment and home for rent/sale guides that you get for free in diners.  Like every publisher in America, were getting killed and they were all the way down under $1 last time we picked them.  This is generally a stock to stick under your pillow and forget about for a couple of years (but another DD or TD (triple down) at $1 of course).

S (12/21 – $3.77, 1/9 – $3.95, 2/5 – $3.41) They don’t have an IPhone so they get no respect, of course.  The fact that they can’t manage to make money doesn’t help either.  They’ve spent a lot of money getting Boost going and the segment (pre-paid wireless) has been growing fast as people in bankruptcy and foreclosure (the fastest growing segment of our population) have no credit for monthly plans.  It may not seem like much but you can play this by taking the Aug $3/4  bull call spread for .40 and selling the $3 puts for .40 for a net ZERO entry on the $1 spread.   TOS says the trade is $.90 in cash + margin to make $1 at $4 (111% in 6 months) and the BE is down at $3 (-12%) so we shouldn’t mind "limiting" our upside.

SB (11/24 – $8.93, 12/21 – $8.27, 1/9 – $8.86, 2/5 – $7.90) is a very boring shipper that pays a very boring 7% dividend and has no options.  They were as low as $6.75  at $8.86.  This is back around our original 10/13 pick and they fell all the way to $6.45 in Nov and may hit it again so more of a wait and see at the moment but fine to scale in as a LONG-term holder.  They have made .58 to .76 a share in Q3 ‘08 through Q2 ‘09 and little is expected of them but there is a serious glut of cargo capacity that will hurt everyone if we keep going down.

TNK (11/24 – $8.18, 12/21 – $8.87, 1/9 – $9.37, 2/5 – $9.15) is another tanker company I like who cut their dividend, reported a loss and had dropped 10% in November - which I had called, at the time, "the trifecta of value buying."  Now they got their 20% back so a bit trickier as a new entry.  The reduced dividend is still 6.4% and hopefully it will return to its former glory over time.  Last time we sold naked puts but they held $7.50 so well that we can do an artificial buy/write with the Aug $7.50/10 bull call spread at $1.20, selling the $7.50 puts for .50 (no less) for a .70 net entry on the $2.50 spread with a b/e at $8.20 (down 11.6%).

Keep in mind that with the atificial buy/writes – we don’t care if we get assigned.  TNK above is put to us at net $8.20 and we WANT to own TNK long-term for $8.20.  If it keeeps going up and we don’t get it, then we will sadly take our 157% profit and move on to something else so don’t let the fact that you "miss out" on the dividend bother you on these plays.  If I want to buy 1,000 shares of TNK at $9,370 and I hope to make a $400 in dividends through August.  There is no good protection with the Aug $10s at .40 and the Aug $7.50s at $1.60 (no premium) so you risk $9,370 to make $400.  My proposal is you just buy 10 of the above spread for net $700 and you make a profit of $950 if TNK just holds $9.15!  Do NOT be afraid of these plays – they are fantastic ways to leverage your virtual portfolio WITHOUT taking on additional risks (on a per-position basis, if you take 5 times more positions, rather than keep the cash handy, then don’t fool yourself – you are taking on more risk!).

WFR (12/21 – $13.05, 1/9 – $15.02, 2/5 – $11.60)  Outlook is 10% lower than last Q, stock is 40% lower.  Seems like a buy to me.  The company is projecting to earn .70 per $11.60 share (p/e of 16) and a conservative entry here, selling the July $12 calls for $1.42 and the July $11 puts for $1.28 is net $8.90/9.45 so another 18.5% discount if put to you and  a nice 35% if called away at $12.  TOS says they only want net $1 per contract to sell the 2012 $10 puts naked for $2.15 and if you pair that with the purchase of the 2012 $10/17.50 bull call spread at $2.60, that’s $7.05 of upside on net .45 cash out of pocket ($3.60 margin) with a break-even at $10.45 (10%).  It’s aggressive but you have a bit upside and you can sell March $14s for .20 and you have over 20 sales ahead of you. 

WHX (11/24 – $16.25, 12/21 – $16.26, 1/9 – $16.93, 2/5 – $16.89) is an interesting little REIT.  They are a subsidiary of WLL that seems to be nothing more than a vehicle to funnel profits off land leases out of the parent company to be distributed out as dividends through WHX.  That makes the income fairly uncertain as it seems tied to oil revenues but they have no debt at all and the dividends work out to over 15% so worth a small position at $16.89.  Sadly – no options… 

ALWAYS IN PROGRESS

 


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  1. leonf675

    Phil, sorry about a possibly dumb question, on on the TNK idea, how are you getting to the $7.90 b/e?
    "Last time we sold naked puts but they held $7.50 so well that we can do an artificial buy/write with the Aug $7.50/10 bull call spread at $1.30, selling the $7.50 puts for .50 (no less) for a .80 net entry on the $2.50 spread with a b/e at $7.90 (down 15.6%).",

  2. doubled

    Phil,
    I’m new here but have been reading your posts for months.  So I’d thought I’d get in a little closer taking more of a ‘daily dose.
    I am curious on your previous ("I like It") view of the Jan 2011 C 5/7.50 BC Spread.  Are you still recommending this or did you just kill it because C is amongst the walking dead? 
    -BTW I am glad I am not the CEO of GS.(well- sort of)  He will need plenty of protection to go out to lunch with that kind of bonus!
    Thanks  Donna D

  3. qcmike

    Phil
     
    Is   Navios Maritime Partners LP NMM
    A shipper we may want to add to the buy list?
    What would be a good trade?
    Thanks
     

  4. magret

    Phil,
    You have often referred to “household name” companies (eg KO, MCD, NKE XOM ec) as being the ones which will be the fastest to recover in the aftermath of a market meltdown. When you have time, are there any other particular stocks which you reccommend and at what price.  The ones listed above probably have higher risk/ reward potential but could be more prone to the market’s whims. Also what do you think of selling calls on “shortable ” companies as disaster hedges rather than buy/wries in EDZ, DXD etc The latter rapidly deteriorate if the market continues to rise for months at a time.  On the other hand you can always roll naked calls. Favourite short term candidate often mentioned are Bidu, POT, FSLR, FCX and X. Also last week CAP mentioned SPG, SLG and KRE. SPG have gained ground these last days. At what prices would you reccommend shorting these or other companies? Thanks.

  5. aclend

    I can’t find what is different here than the last one?

  6. kustomz

    aclend what date are you referring to, just curious all i can find is the one from Jan 22 which shows that this one is updated

  7. bord

    Phil, Cramer pumped up AAPL yesterday big yesterday and we’re at 215 this morning. I am an AAPL bull, but not one week ago we were slumming below 200 pricewise,so it is moving a bit quick.  I am using our spreads, particularly the 155-185 bull call and 180-200 bull call (with put sales). I am scaled in only about 1/2 on where I want to be on AAPL. Do you think AAPL is leaving the station and I can scale in 3/4, or is this a good time to actually sell some into the Cramer pump? Thx.

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