I just wanted to make a quick observation. I read recently that the Dow (DJIA, hence the ETF DIA) has not moved up or down more than 100 points a day in about three weeks. I think it's continuing. Look at today. The Dow started down almost 100 points, dropped slightly below that for seconds, and then struggled back all day, closing down 6 points.
If this is the "market at hand," then you can make money. Here's the point. If the DJ futures show down 100 points, and you grab the puts, say the $125s (On the DIA) or the $125 calls if it's showing up that much, then it might be good for a .50 cent profit, or $500.
Even smaller amounts of money will work for a few hundred dollars. I heard Kina got out of her $125 with a $200 profit. Not much, but it's better than a _____________________ (you get creative here).
More Later. Wade
_____________________________________
From the MONEY & POLITICS FILE:
I recently read a great quote from Thomas Jefferson: "I have sworn upon the alter of God, eternal hostility against every form of tyranny over the mind of man."
Monday, January 30, 2012
Tuesday, January 24, 2012
2012 Part 2
Hi again. I know you've been anxiously waiting my comments on my prognostication for the rest of the year. So here we go. In short, it's stuck. After I wrote the first blog, saying the same thing and commented on the fact that to an extent the market will be political-news driven, I was reading an article/opinion in Investor's Business Daily. It stated: "Look for ups and downs in the polls to have just as much, if not more, influence on this year's market . . ." I couldn't have said it better. I'll repeat my own take on this. The market wants the current president to go back to Hawaii or Chicago or wherever. He has worn out his welcome.
The year 2011 came and left with a whimper. Our market ended about where it started. However, there were some serious gyrations during the year, especially last August. So we were flat. The rest of the world did not fair so well. Germany and France were down 20%. Brazil was down 26% (even after Miss Hillary said we should be more like Brazil). In Asia, Japan was down 16%, India down 40%, Hong Kong down 18%, Taiwan down 25% and the new gorilla in the China Shoppe was China, with it's small public companies down 36%. I say small because their biggest companies are not up to our standards.
So, even the liberal LA Times said it's been a "pretty good year." Some would say we were in a bear market. If you define a bear market as a reduction in the market of 20% or more, than we were. But hold your horses. Nobody, especially in the Obama-Obsessed-Media will call it that. It all depends when your starting point and ending point is. It depends on your definition of "is." I guess I should join them and blame it on Pres. Bush, but this "recovery" started two full years into this presidency.
Lastly, I'm an eternal optimist. The American economy and Americans in general are too strong and too resilient to even let this Neo-Marxist administration keep us down for long. The IBD said, " . . . the fact that our country is being run by the most anti-business, anti-capitalist, anti-free-market, anti-entreprenuer and anti-Wall Street administration in U.S. history."
This year will plod along. There will be plenty of opportunities to buy good stocks. Plenty of chances to make extra income. And plenty of time to get your own business up and going.
May you prosper well.
Wade
The year 2011 came and left with a whimper. Our market ended about where it started. However, there were some serious gyrations during the year, especially last August. So we were flat. The rest of the world did not fair so well. Germany and France were down 20%. Brazil was down 26% (even after Miss Hillary said we should be more like Brazil). In Asia, Japan was down 16%, India down 40%, Hong Kong down 18%, Taiwan down 25% and the new gorilla in the China Shoppe was China, with it's small public companies down 36%. I say small because their biggest companies are not up to our standards.
So, even the liberal LA Times said it's been a "pretty good year." Some would say we were in a bear market. If you define a bear market as a reduction in the market of 20% or more, than we were. But hold your horses. Nobody, especially in the Obama-Obsessed-Media will call it that. It all depends when your starting point and ending point is. It depends on your definition of "is." I guess I should join them and blame it on Pres. Bush, but this "recovery" started two full years into this presidency.
Lastly, I'm an eternal optimist. The American economy and Americans in general are too strong and too resilient to even let this Neo-Marxist administration keep us down for long. The IBD said, " . . . the fact that our country is being run by the most anti-business, anti-capitalist, anti-free-market, anti-entreprenuer and anti-Wall Street administration in U.S. history."
This year will plod along. There will be plenty of opportunities to buy good stocks. Plenty of chances to make extra income. And plenty of time to get your own business up and going.
May you prosper well.
Wade
Thursday, January 12, 2012
POTENTIAL CASH FLOW DEALS
Hi there my friends.
I haven't forgotten to write the next piece in the comment category about 2012. I'm working on it right now. Well not right right now, but when I finish this blog I'll wrap it up. In fact, I have more than one blog to write. It's not just about the market or the economy, but about how to use this information to make more money. I'll call it "2012 part 2, and then part 3.
POTENTIAL CASH FLOW DEALS.
The market is not heating up. In fact, it's having a devil of a time with 12,400 (The Dow). But there are always trades to be made and profits to be gathered in. Here are some covered call possibilities for Feb. One has a good Jan. premium, so let's get to it.
ROYL: The stock was at $4.65. the Feb. S45 calls were .35 cents to sell. 1,000 shares would be $4,650, so if you sold the $5 calls and actually got called out, you'd make another $350. But you'd take in $350 now for agreeing to sell the stock at $5. It's not 10% but it's not bad. Look at a chart on this company. It has signed a pretty big deal and it's future looks good at this time, albeit things can change.
ELN: I've traded this one off and on for years. The stock is at $13.65, or $13,650 to buy. If you used margin that would be about $6,825. The $13 calls are going for $1.20 to sell. If you did so and got called out, you would adjust your profits by $650 against your gain. Still, you would take in $1,200 dollars for selling 10 contracts at $1.20 each, or $1,200. That would be a net of $550. But take a look at the $14 calls. They going for l65 cents to sell, or $650 now. You get to keep this no matter what. If the stock goes above $14 and you get called out, you'd make another $350 ( $13,650 up to $14,000 = $350). So, take in $650 and potentially make another $350. Pretty good cash flow now, and good potential for more later.
BAC: Look at Bank of America (BAC). The stock is at $6.50. Look at the Jan $6 calls. Yes, these expire next week, Jan. 21st. They are going for .90 cents to sell. That's $900 for you right now. If you get called out you'd have to give back .50 cents, or $500. That's a cool $400 for a week and a few days.
Now, look at the February $6 calls. They're going for $1.00 to sell. That is $1,000 and the same scenario if you get call out. Here's a good look at a choice and the difference it would make. I say, take the money at hand. Sometimes the near-term option is not going for much, so go on out to the next month. However $900 is $900. If the stock goes down, you can buy-back the option for less, keep the stock and then sell the February's then.
There are similar profits to ELN in JDSU. Also look at MU, RMBS, FRO, and even JBLU.
Happy Investing and Trading. Let me know how it goes or if you have any questions.
Your humble autodidact,
Wade
I haven't forgotten to write the next piece in the comment category about 2012. I'm working on it right now. Well not right right now, but when I finish this blog I'll wrap it up. In fact, I have more than one blog to write. It's not just about the market or the economy, but about how to use this information to make more money. I'll call it "2012 part 2, and then part 3.
POTENTIAL CASH FLOW DEALS.
The market is not heating up. In fact, it's having a devil of a time with 12,400 (The Dow). But there are always trades to be made and profits to be gathered in. Here are some covered call possibilities for Feb. One has a good Jan. premium, so let's get to it.
ROYL: The stock was at $4.65. the Feb. S45 calls were .35 cents to sell. 1,000 shares would be $4,650, so if you sold the $5 calls and actually got called out, you'd make another $350. But you'd take in $350 now for agreeing to sell the stock at $5. It's not 10% but it's not bad. Look at a chart on this company. It has signed a pretty big deal and it's future looks good at this time, albeit things can change.
ELN: I've traded this one off and on for years. The stock is at $13.65, or $13,650 to buy. If you used margin that would be about $6,825. The $13 calls are going for $1.20 to sell. If you did so and got called out, you would adjust your profits by $650 against your gain. Still, you would take in $1,200 dollars for selling 10 contracts at $1.20 each, or $1,200. That would be a net of $550. But take a look at the $14 calls. They going for l65 cents to sell, or $650 now. You get to keep this no matter what. If the stock goes above $14 and you get called out, you'd make another $350 ( $13,650 up to $14,000 = $350). So, take in $650 and potentially make another $350. Pretty good cash flow now, and good potential for more later.
BAC: Look at Bank of America (BAC). The stock is at $6.50. Look at the Jan $6 calls. Yes, these expire next week, Jan. 21st. They are going for .90 cents to sell. That's $900 for you right now. If you get called out you'd have to give back .50 cents, or $500. That's a cool $400 for a week and a few days.
Now, look at the February $6 calls. They're going for $1.00 to sell. That is $1,000 and the same scenario if you get call out. Here's a good look at a choice and the difference it would make. I say, take the money at hand. Sometimes the near-term option is not going for much, so go on out to the next month. However $900 is $900. If the stock goes down, you can buy-back the option for less, keep the stock and then sell the February's then.
There are similar profits to ELN in JDSU. Also look at MU, RMBS, FRO, and even JBLU.
Happy Investing and Trading. Let me know how it goes or if you have any questions.
Your humble autodidact,
Wade
A New Year
Hello my New Year's Friends.
This is going to be a great year---not because of a rampaging bull-market, but because we deal with the market at hand. We take what it gives us and we put market forces to work for us. I've written several thoughts, about the market, the political arena and the economy.
ITEM #1: I still do not think we'll have that rampaging bull market. Many have commented on the fact that it's an election year. This time, I don't agree. Usually the third year of a presidency is the best of the four years. That didn't pan out last year, with the markets closing up or down a fraction of the beginning. I think political news will give short-term direction to the movements in the market. Notice I didn't say that political news and opinions, would drive the market up a big way, or down by big moves. I think, for the most part, it is range bound. I think the Dow (The DJIA 30 stocks), to the extent that it represents the whole market, will trade between 11,600 and 12,800. And those two points are the extremes. If the market goes higher or lower, I think it will be only temporary---or better said, those moves will be outliers. Then it will settle back within those perimeters. In short, it's stuck. I've written before what it will take, and I'll mention it briefly here: We need a repeal of Sarbanes-Oxley---especially Reg. FD, or Regulation Fair Disclosure. What a destructive law. And it would be a great boon to get rid of the new law passed last summer: Dodd-Frank. We have not yet seen the destruction that this law will cause. It's horrible.
I won't wax too political here, but a simple observation. Many people think that the current administration is dangerous for America. I do too. I project that every time news comes out that the Republicans will win the presidency (and to a lesser extent the Senate) the market will go up, almost despite the quarterly news cycle or news out of Europe. Conversely, every time news or polls come out that point to four more years of the current socialist agenda, the market will go down.
I hear and read this sentiment everywhere. It will get more pronounced as we get near election day.
ITEM #2: I was reading an article in Barron's that said, in regards to the market this year, 2012. He said overall that " . . . state of the market, Corporate America, the economy and the world." I think this mirrors my own feelings, in that there is more to a stock price movement, or a whole market movement than just earnings, though I think earnings are vastly important. Read two paragraphs below.
Recently I wrote a blog entitled "Picturesque." I stated that we look at a stock or a company and have to consider the arena of its existence, the whole market, the economy and the whole world, especially the current state of Europe (Which I hope is not our destiny). I will now add one more consideration to the list: It is the product or service of the company. Look at LuluLemon Athletica (LULU). I think the Barron's quotation is right on, but some of the points seem confusing, in that they are redundant. Again, you will not make decisions in a vacuum. You will not invest in a stock that is unaffected by Presidential decisions or liberal policies.
All of these aspects effect earnings and earnings growth. Remember, a stock price today is based on one thing: "A STOCK PRICE TODAY IS BASED ON THE ANTICIPATION OF FUTURE EARNINGS." Do you see how interest rates, a debt crisis, a lawsuit, a new competitor, or a host of other things effect the price of a stock?
I hope to be of service this coming year. I will study and contemplate things and try to help you connect the dots better.
Wade
This is going to be a great year---not because of a rampaging bull-market, but because we deal with the market at hand. We take what it gives us and we put market forces to work for us. I've written several thoughts, about the market, the political arena and the economy.
ITEM #1: I still do not think we'll have that rampaging bull market. Many have commented on the fact that it's an election year. This time, I don't agree. Usually the third year of a presidency is the best of the four years. That didn't pan out last year, with the markets closing up or down a fraction of the beginning. I think political news will give short-term direction to the movements in the market. Notice I didn't say that political news and opinions, would drive the market up a big way, or down by big moves. I think, for the most part, it is range bound. I think the Dow (The DJIA 30 stocks), to the extent that it represents the whole market, will trade between 11,600 and 12,800. And those two points are the extremes. If the market goes higher or lower, I think it will be only temporary---or better said, those moves will be outliers. Then it will settle back within those perimeters. In short, it's stuck. I've written before what it will take, and I'll mention it briefly here: We need a repeal of Sarbanes-Oxley---especially Reg. FD, or Regulation Fair Disclosure. What a destructive law. And it would be a great boon to get rid of the new law passed last summer: Dodd-Frank. We have not yet seen the destruction that this law will cause. It's horrible.
I won't wax too political here, but a simple observation. Many people think that the current administration is dangerous for America. I do too. I project that every time news comes out that the Republicans will win the presidency (and to a lesser extent the Senate) the market will go up, almost despite the quarterly news cycle or news out of Europe. Conversely, every time news or polls come out that point to four more years of the current socialist agenda, the market will go down.
I hear and read this sentiment everywhere. It will get more pronounced as we get near election day.
ITEM #2: I was reading an article in Barron's that said, in regards to the market this year, 2012. He said overall that " . . . state of the market, Corporate America, the economy and the world." I think this mirrors my own feelings, in that there is more to a stock price movement, or a whole market movement than just earnings, though I think earnings are vastly important. Read two paragraphs below.
Recently I wrote a blog entitled "Picturesque." I stated that we look at a stock or a company and have to consider the arena of its existence, the whole market, the economy and the whole world, especially the current state of Europe (Which I hope is not our destiny). I will now add one more consideration to the list: It is the product or service of the company. Look at LuluLemon Athletica (LULU). I think the Barron's quotation is right on, but some of the points seem confusing, in that they are redundant. Again, you will not make decisions in a vacuum. You will not invest in a stock that is unaffected by Presidential decisions or liberal policies.
All of these aspects effect earnings and earnings growth. Remember, a stock price today is based on one thing: "A STOCK PRICE TODAY IS BASED ON THE ANTICIPATION OF FUTURE EARNINGS." Do you see how interest rates, a debt crisis, a lawsuit, a new competitor, or a host of other things effect the price of a stock?
I hope to be of service this coming year. I will study and contemplate things and try to help you connect the dots better.
Wade
Monday, January 2, 2012
EL Stock Split
Estee Lauder is doing a 2:1 stock split on Jan 12th. Look at the chart below. It's a perfect stock split chart. See how it ran up on the announcement. Then it formed a bit of a rolling pattern, with an upward bias. It looks good around $108 to $110 to buy a call.
That would be the trade to catch the rolls, and then try to position in, like MOlly did with Ross Stores, on the rally into the split. I just read an article about EL and it's doing very well.
That would be the trade to catch the rolls, and then try to position in, like MOlly did with Ross Stores, on the rally into the split. I just read an article about EL and it's doing very well.
WRITING COVERED CALLS
We've had a few disappointments with some of the stocks chosen to use for covered call writing. We can always improve in the choice department. If we look at just the numbers we often get a lopsided picture. We also must remember to put in our stop losses to protect the downside.
These stocks and their options are not that large in terms of rate of return. In fact they're weak. Why? Part of this is that the market is range-bound. Look at a chart of the Dow. Look below at the DIA, an ETF stock of the Dow 30. It looks like the current range for support to resistance is about 350 to 400 points---say, 11,800 on the support side and 12,200 or so on the resistance end. Will it go higher? Who knows. We're heading into January, but the market is climbing a wall of worry.
So, don't look for great options. The implied volatility in the option prices is lower right now.
LOOK AT THESE DEALS:
CLWR: the stock is at $1.90; a thousand shares is $1,900. the February $2 calls are.20 cents, or $200. But see commissions wipes out a lot of this.
FRO looks good. This is a large container shipping company, Frontline. The stock was $4.10. The Jan $4 calls were .40 X .45 cents. So .40 cents to sell, or $400. The Feb. $4 calls were .65 cents to sell. Seven weeks for $650 now, and maybe a give back of $100 as the stock is .10 cents in the money, or $100.
ROYL was $4.60 and the Feb $5 calls were .30 X .55 cents. There is such a large spread you can probably get .40 cents.
YHOO at $16.08 has Jan $16 calls at .77 to sell and Feb $16 calls at $1.19.
Even Sprint (S) is at $2.28 with Feb $2 calls at .42 cents.
Look at MBI. This used to be one of my favorites. Stock at $11.60 and the Feb $11 calls were going for $1.60 and the Feb $12s were going for $1.12 to sell.
This last one looks good. check it out. I also like FRO. Big decisions ahead for you and your broker.
More later.
Wade
These stocks and their options are not that large in terms of rate of return. In fact they're weak. Why? Part of this is that the market is range-bound. Look at a chart of the Dow. Look below at the DIA, an ETF stock of the Dow 30. It looks like the current range for support to resistance is about 350 to 400 points---say, 11,800 on the support side and 12,200 or so on the resistance end. Will it go higher? Who knows. We're heading into January, but the market is climbing a wall of worry.
So, don't look for great options. The implied volatility in the option prices is lower right now.
LOOK AT THESE DEALS:
CLWR: the stock is at $1.90; a thousand shares is $1,900. the February $2 calls are.20 cents, or $200. But see commissions wipes out a lot of this.
FRO looks good. This is a large container shipping company, Frontline. The stock was $4.10. The Jan $4 calls were .40 X .45 cents. So .40 cents to sell, or $400. The Feb. $4 calls were .65 cents to sell. Seven weeks for $650 now, and maybe a give back of $100 as the stock is .10 cents in the money, or $100.
ROYL was $4.60 and the Feb $5 calls were .30 X .55 cents. There is such a large spread you can probably get .40 cents.
YHOO at $16.08 has Jan $16 calls at .77 to sell and Feb $16 calls at $1.19.
Even Sprint (S) is at $2.28 with Feb $2 calls at .42 cents.
Look at MBI. This used to be one of my favorites. Stock at $11.60 and the Feb $11 calls were going for $1.60 and the Feb $12s were going for $1.12 to sell.
This last one looks good. check it out. I also like FRO. Big decisions ahead for you and your broker.
More later.
Wade
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