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February 27th, 2009 at 11:13 am
Sorry guys, I’ve been working on the Buy List and just lost the whole thing in a big power outage. The short story is there are a ton of good deals there so if there’s anything you like, feel free to ask.
UYG/Mampcs – I would not sell SKF $170 puts AT THIS MOMENT because I very firmly believe SKF will be lower than $170. Mathwise, I get the play and maybe if you take your legs now and ease into the covers. Don’t forget SKF can drop in half very quickly (25% gain in XLF). Europe had what amounted to a 20% gain in the financials yesterday morning – it sold off but you would have hated to have that putter then.
DITM/RMM – Don’t forget that the low premium means they lose a lot if we do get a run up. Other than X (and Anton would say GE), they are all fine long-term plays and you have little to gain by rolling them now IF we hold our bottom. That being said, you could consider rolling GE to 3x the June $11 puts as it adds $1 in premium (x3 is $3) and GE only has to get back to $10 get half your money back. You can cover with Apr $6 puts at .46 if you are worried about BK – may not be a bad idea to cover half… PFE – (by the way, keep in mind that you need to roll when 1/2 the putter’s premium is gone, that’s why these are so painful) those go to 2x the June $14 puts, costs you .75 to push them down $3.50. CAT can go to 2x the Aug $20 puts for $1. MCD I would just roll 1x to the Apr $55 puts and pay the $1.50. X I would either bite the bullet and roll to the Apr $25s for $4 or 2x the July $20 puts at $4.85 (costs .50) and cover with Oct $10 puts at $1.50 – just in case. Also, what Eph said!
PCU/Pharm – I like FCX much better overall but PCU is a good pure play.
BA/Eph – I agree, a death stock but will the US let them go under? Will they not be around in 20 years? They are priced for BK at this point.