Buy BA Boeing, stock is higher on earnings. Both the top line revenue, and bottom line earnings are strong. There is some uncertainty with the launch of the 787 coming up. However, there is also strong upside with this more fuel efficient plane coming online.
Current positions LEA, TXI , BA
LEA and TXI hedged, BA a small unhedged position
Wednesday, January 31, 2007
Friday, January 26, 2007
Volatility remains low
AdamsOption blog cites the low volatility and that options continue to trade for higher value than the historically low volatility. (link)
>>> quote
There are 2 conflicting directional interpretations here as far as I am concerned. 1) The low-low stock volatility is bearish from a complacency standpoint. and 2) the *overbid* options are bullish, mainly because the market is overpricing *accident* risk relative to the actual behavior.
My total guess is that all this combined is moderately bullish.
<<< end quote
Current positions: TXI, LEA long stock, short calls
>>> quote
There are 2 conflicting directional interpretations here as far as I am concerned. 1) The low-low stock volatility is bearish from a complacency standpoint. and 2) the *overbid* options are bullish, mainly because the market is overpricing *accident* risk relative to the actual behavior.
My total guess is that all this combined is moderately bullish.
<<< end quote
Current positions: TXI, LEA long stock, short calls
Sell WDC Western Digital
WDC down after its earnings. I bail out for a small loss. I do not see a good choice as far as rolling down, or rolling out the option.
Thursday, January 25, 2007
Too hot to handle PJC Piper Jaffrey
Logic tells me to buy PJC. It was up nicely after earnings, and pulled back to support. However, the weakness today is enough to make someone air sick. Looks like yesterday's breakout was a fakeout and now all the oxygen is being drained out of the trap. (3-month-chart).
Wednesday, January 24, 2007
Ebay up, little guys win
Ebay the online auction company up on earnings after the close. Schaeffer's (link) has been reporting a lot of speculation on calls by small timers. Conventional wisdom would be to take the opposite side of this trade and sell calls or buy puts. This time the call buying speculators seem to have won and beat the "house."
Tuesday, January 23, 2007
Pick up STX Seagate
STX earnings better than expected, stock trading up in after hours. This benefits my WDC Western Digital.
Airlines hit hard today. Oil rebounds. Gold very strong--I might add to my surprise. I have been accumulating more gold coins. I suggest all investors have some money in hard assets such as gold coins, silver coins or the like, as insurance against bizarre events and a hedge against the possibility of hyper inflation.
Airlines hit hard today. Oil rebounds. Gold very strong--I might add to my surprise. I have been accumulating more gold coins. I suggest all investors have some money in hard assets such as gold coins, silver coins or the like, as insurance against bizarre events and a hedge against the possibility of hyper inflation.
Monday, January 22, 2007
Bad news at Boeing BA
BA down hard today on an analyst downgrade. The report cites potential price increases by suppliers for the new 787, also possible a top in this cycle of airline orders.
As readers know, I am long term bullish on BA and will look for a low risk entry point.
As readers know, I am long term bullish on BA and will look for a low risk entry point.
Friday, January 19, 2007
Pin collectors (options expiration)
Over at Adams option blog, he writes about pins and why they happen (link). Adam also mentions AAPL Apple Inc and GS Goldman Sachs as pin candidates.
For novices reading along, a pin happens when a stock closes right at a strike price. Each option has a strike price. For example, I own WDC and am short the Feb 20 calls. WDC closed just a bit above 20 today. If it closes right at 20, all the puts and calls with a strike price of 20 expire worthless. All the option sellers would like this scenario and often will use their resources to nudge a stock to get it to pin.
Once in a while I will look for a scalp trade where there is decent premium left during expiration week. Of course, sometimes these can blow up, and the profits tend to be tiny. However, the annualized rate of return can be quite high for a day or a few days holding period.
For novices reading along, a pin happens when a stock closes right at a strike price. Each option has a strike price. For example, I own WDC and am short the Feb 20 calls. WDC closed just a bit above 20 today. If it closes right at 20, all the puts and calls with a strike price of 20 expire worthless. All the option sellers would like this scenario and often will use their resources to nudge a stock to get it to pin.
Once in a while I will look for a scalp trade where there is decent premium left during expiration week. Of course, sometimes these can blow up, and the profits tend to be tiny. However, the annualized rate of return can be quite high for a day or a few days holding period.
Wednesday, January 17, 2007
AAPL and INTC
INTC disappointed, and AAPL flew past estimates. INTC down hard today, though it is not the bellwether leader that it used to be. I can remember times when a bad report from Intel crushed the entire market.
Apple Inc reported after the close and did well. It also has the hot new I-Phone scheduled for June shipment. AAPL is extended and a high risk stock at this point.
Tops are formed when there are a maximum number of buyers--that is usually when the news looks great. I'm not calling top for Apple, and if I did, I would not play it. Picking the top is not a profitable game. It is usually much safer and more profitable to go short on the first rally.
Apple Inc reported after the close and did well. It also has the hot new I-Phone scheduled for June shipment. AAPL is extended and a high risk stock at this point.
Tops are formed when there are a maximum number of buyers--that is usually when the news looks great. I'm not calling top for Apple, and if I did, I would not play it. Picking the top is not a profitable game. It is usually much safer and more profitable to go short on the first rally.
Thursday, January 11, 2007
Buy LEA Lear Automotive
Buy/write LEA Lear Automotive
Buy the stock, sell the Feb 30 call
LEA higher on earnings projections. They are an auto parts provider. Classic case of stock running into old resistance at 30. Stock is still cheap (stats) to my eyes, with an eye popping price-to-sales of 0.10 and sales projected higher.
As always this is not a recommendation to buy or sell.
Current holdings: LEA, TXI, WDC all hedged, long stock, short calls.
Buy the stock, sell the Feb 30 call
LEA higher on earnings projections. They are an auto parts provider. Classic case of stock running into old resistance at 30. Stock is still cheap (stats) to my eyes, with an eye popping price-to-sales of 0.10 and sales projected higher.
As always this is not a recommendation to buy or sell.
Current holdings: LEA, TXI, WDC all hedged, long stock, short calls.
Tuesday, January 09, 2007
A one year wonder
Mark Hulbert at Marketwatch writes about the top performing stock newsletter for 2006 (link). The short and sweet version is that this newsletter turned in a +75.5% gain for the year. However Hulbert takes a look at what might happen if a person took the top newsletter each year for the last ten and followed them for a year. This produced a dismal return.
A couple of sites/writers have posted some eye opening performance numbers for 2006. Some are looking for clients. Hulbert provides a service in that he does real world performance that mimicks what actual subscribers might be able to duplicate. Some will tout big numbers, however, a real world analysis shows that subscribers could not humanly duplicate them.
Like others, I could put any number out there and start trolling for paid clients. However, without someone to verify the record, I would not put a lot of stock into what someone writes.
As always, I am not here to sell you anything, or to recommend stocks to buy or sell. This public journal helps keeps me true to myself and my investment philosophy.
A couple of sites/writers have posted some eye opening performance numbers for 2006. Some are looking for clients. Hulbert provides a service in that he does real world performance that mimicks what actual subscribers might be able to duplicate. Some will tout big numbers, however, a real world analysis shows that subscribers could not humanly duplicate them.
Like others, I could put any number out there and start trolling for paid clients. However, without someone to verify the record, I would not put a lot of stock into what someone writes.
As always, I am not here to sell you anything, or to recommend stocks to buy or sell. This public journal helps keeps me true to myself and my investment philosophy.
Monday, January 08, 2007
Gold (and silver), C and SNE
Clive Maund titles his article "Bottom Fishers Beware" (link). I tend to agree, mostly on the complacent attitude of the long term bulls. Not a one of them seems to be running
scared or talking about dumping their holdings. This means the correction has more to run, it may mean more time in this price range, or lower prices. Time sometimes is as good as price--it certainly is for option sellers.
C Citigroup and SNE Sony are two stocks on my current short list of candidates to buy. No one is going to get rich on either of these stocks. However, that is fine by me. To go back to a baseball analogy, I look for bunt singles or clean line drives with an occasional double down the line. I'm not a home run hitter. In the past, when I swing for the fences, I either strike out or lose patience and sell for a small profit.
There are a thousand ways to make money in the stock market, find one that suits your personality.
scared or talking about dumping their holdings. This means the correction has more to run, it may mean more time in this price range, or lower prices. Time sometimes is as good as price--it certainly is for option sellers.
C Citigroup and SNE Sony are two stocks on my current short list of candidates to buy. No one is going to get rich on either of these stocks. However, that is fine by me. To go back to a baseball analogy, I look for bunt singles or clean line drives with an occasional double down the line. I'm not a home run hitter. In the past, when I swing for the fences, I either strike out or lose patience and sell for a small profit.
There are a thousand ways to make money in the stock market, find one that suits your personality.
Friday, January 05, 2007
Roll down TXI, Buy WDC
Roll down the TXI call, I don't like overall market action. A roll down involves moving the strike price lower, this reduces exposure and limits upside. Buy the Feb 70 call, sell the Feb 65 call. TXI got a mention at Motley Fool (link) as an "all-star" stock.
Buy/write on WDC Western Digital. Stock is lower on an analyst downgrade. Windows Vista has huge capacity requirements, so many folks that want to upgrade to that operating system will likely have to upgrade their hard drives.
Buy/write on WDC Western Digital. Stock is lower on an analyst downgrade. Windows Vista has huge capacity requirements, so many folks that want to upgrade to that operating system will likely have to upgrade their hard drives.
Thursday, January 04, 2007
Buy TXI Texas Industries
Buy/write TXI Texas Industries
Buy the stock, sell the Feb 70 calls. TXI up on earnings. It is in the cement business (profile). TXI has a market cap of $1.6 billion--a much smaller cap stock than I often buy.
I found the stock when looking through Fidelity's small cap fund's top holdings. Traders can often piggyback on good research by seeing what fund managers are buying or holding. This means someone with a good education and significant time and resources took a close look at the stock and thought it worthy.
Buy the stock, sell the Feb 70 calls. TXI up on earnings. It is in the cement business (profile). TXI has a market cap of $1.6 billion--a much smaller cap stock than I often buy.
I found the stock when looking through Fidelity's small cap fund's top holdings. Traders can often piggyback on good research by seeing what fund managers are buying or holding. This means someone with a good education and significant time and resources took a close look at the stock and thought it worthy.
Wednesday, January 03, 2007
Sell GM, gold, LCC
Sell GM, buy back the call
Bank America analyst downgrades GM. I get out with a breakeven profit, living up to one of my rules:
-> Never let a profit turn into a loss.
That isn't set in stone for everyone, but I find it to work well for my trading style.
The stock market booms ahead, as oil turns lower. Gold's morning rally has turned into a route. The XAU is getting hammered as is the trading gold stock index ETF, GDX. I am tempted by the oils, but they have already lived up to making a new high when the commodity fails to make a new high.
I am close to pulling the trigger on LCC USAir, then it booms ahead. Best not to chase. As I wrote earlier, I expect more volatility for early January. I do not expect a smooth ride up, if up is the direction.
Bank America analyst downgrades GM. I get out with a breakeven profit, living up to one of my rules:
-> Never let a profit turn into a loss.
That isn't set in stone for everyone, but I find it to work well for my trading style.
The stock market booms ahead, as oil turns lower. Gold's morning rally has turned into a route. The XAU is getting hammered as is the trading gold stock index ETF, GDX. I am tempted by the oils, but they have already lived up to making a new high when the commodity fails to make a new high.
I am close to pulling the trigger on LCC USAir, then it booms ahead. Best not to chase. As I wrote earlier, I expect more volatility for early January. I do not expect a smooth ride up, if up is the direction.
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