Wednesday, February 28, 2007

Buy CHRW C. H. Robinson

Buy/write CHRW C.H. Robinson

Buy the stock, sell the April 50 call. Stock had a nice earnings report some time back, and I've been waiting to buy this stock on a pullback. Recently announced that CHRW will join the SP500 index. The call is in-the-money, so a conservative play. Most stocks that get added to the SP500 start to trade more in line with the index. Usually that means lower volatility. CHRW options trade at a relatively high implied volatility of 32% vs. about 17% for the SP. A small bonus is that the stock goes ex-dividend 18 cents on March 7th.


Tuesday, February 27, 2007

Blindsided, rolldown C calls

China market cracks 8.8% in one day after a 126% run up in 2006.

I am taking some lumps. I roll down my C calls, buying back the Apr 55, selling the Apr 52.5 calls. This reduces my risk, lowers the profit potential.

Right now, the U. S. market is the tail on the dog, until events sort themselves out. I do not believe this is the time to be the hero and load the boat. I remain mostly in cash, with a small unhedged position in BA and hedged in C.

Friday, February 23, 2007

Buy C Citigroup

Buy/write C Citigroup, buy the stock, sell the Apr 55 call

Stock pulls back to 50 day moving average (red line on chart). C also has a 4% dividend, though it just went ex-dividend on Feb 1st.

Wednesday, February 21, 2007

Bad news that helps a stock

At Adams option blog, a paragraph about the old days of Caterpillar CAT, where earnings would be terrible and the stock would rally after each report. The writer was an options market maker for CAT. He is now observing similar patterns in housing stocks, where bad news is met by rising stock prices. Read the whole thing at the link (Wed Feb 21, Subdivisions).

Jack in the Box reports great earnings and the stock booms ahead. I am adding it to my buy-on-a-pullback list (chart).

Bad news that helps a stock

At Adams option blog, a paragraph about the old days of Caterpillar CAT, where earnings would be terrible and the stock would rally after each report. The writer was an options market maker for CAT. He is now observing similar patterns in housing stocks, where bad news is met by rising stock prices. Read the whole thing at the link (Wed Feb 21, Subdivisions).

Jack in the Box reports great earnings and the stock booms ahead. I am adding it to my buy-on-a-pullback list (chart).

Tuesday, February 20, 2007

Big correction coming for gold?

Is today's $10+ drop the start of something significant, or a minor hiccup?

Some discussion here about a ten-year overlay chart that shows parallels between the 1970s run up and the current run up. If the gold train does follow the same tracks, a correction to $500 could be in the cards. That's the bad news, the good news is that a rocket ride up to $2000 would follow.

I shy away from predictions. I follow the price and fundamentals and look for low risk entry points.

Friday, February 16, 2007

Pay Day

Today is options expiration day, or hopefully for option writers, pay day.

TXI and LEA will be called away. TXI for a smallish gain, LEA for a decent one, though most trader types would call 5% small.

The QQQQ chart looks like a nice base. There is healthy skepticism about this rally. It has been a long time since even a 2% correction on the Dow. Despite that, the old cliche is "don't fight the tape," from Marty Zweig and others. The markets wants to go higher, it is usually a money losing proposition to fight it. Yes, there are any number of clouds on the horizon, including low levels of mutual fund cash, topping action in leading stocks such as GOOG and AAPL. The bulk of the evidence is on the bullish side for now. Some stocks I am looking at include: C Citigroup, CHRW C.H. Robinson, EL Estee Lauder.

Open positions after today: long BA Boeing.

Tuesday, February 13, 2007

Free trades!?

Wells Fargo and Bank America are offering a promotion with free trades, when a person maintains a minimum balance ($25,000 for 100 free trades and $36,000 for 360 free trades). I saw this on Schaeffer's option site (link).

Monday, February 12, 2007

How much gold is enough?

Random Roger answer the question, how much gold (link). The bottom line is about 3% in GLD, and 3% in a mining stock, and 2% in a related industry such as timber or chemicals.

My own suggestion has been and continues to be 2% to 3% in physical hard assets, such as gold coins, silver coins or similar bullion items. If a person wants some equity in the form of mining stocks that is separate in my mind. For long termers a little dab will do.

Friday, February 09, 2007

Lear LEA accepts Icahns offer

Lear LEA accepts Carl Icahns offer to buy the firm.

The stock is pulling back today, and is up over 25% since my buy in. The bad news is that I sold the calls and will only get 5% of that move. This is one of the signficant risks when selling covered calls. If a nice buyout offer comes along, upside is limited to the call premium. Still, I will take a 5% profit in five weeks with low perceived risk, over and over and over.

My LEA will get called when options expire on Friday, February 16th. Cheers.

Thursday, February 08, 2007

Under Armor UA

Under Armor UA gets a bump up after a positive mention on Jim Cramer's Mad Money show on CNBC. Looking at the stats, it is a growth stock, a pricey one. The chart looks better than the fundamentals.

Tuesday, February 06, 2007

Toyota and Cisco

Toyota and Cisco report good earnings. TM continues to take market share from struggling Ford and General Motors. I've owned TM in the past, and if it pulls back to the 50 day-moving-average (red line in chart), that looks like a low risk entry, about 129 right now).

CSCO surprises to the upside. That stock had a nice bounce off its 50 day ma in November (chart).

I try to keep things simple. For technical analysis, the 50 day, and 200 day simple moving average, candlesticks, and MFI (a momentum indicator). For fundamental analysis, I look at summary page and key in on price-to-sales, sales growth, return on equity.

Friday, February 02, 2007

Two bullish arguments

Gary Kaltbaum at Trading Markets (Bulls in Full Control article) and Mark Hulbert at Marketwatch (Transports lead the way, article) make points for the bullish case.

Stocks are skittish, often over-reacting to earnings. Stocks such as Estee Lauder (cosmetics) and C.H. Robinson (transport) both had huge jumps on better earnings. There are many other stocks where a few pennies better or worse move the stock a huge percentage. For a position trader, these stocks are moving too fast on the day of the announcement. The next few days often bring a much safer entry point.

Positions: long TXI, LEA, BA

Thursday, February 01, 2007

Google

Google is the headline stock of the day. The earnings were good, and the chart was poised for a breakout. However, the price action in the stock fizzled. I would lean towards the long side, though neither side is compelling at the moment.

Someone else pointed out that Google is a relatively low volatility stock, in terms of historic price action (chart). The large point moves translate into small percentage moves.