The Money Tree

Safely Generating Income in Retirement

Potential September Trades

Posted by mounddweller on August 23, 2009

I’m having a real hard time this month finding anything spectacular.  I can talk
myself out of most anything that looks remotely interesting.  Here’s what I’ve
considered thus far (in order of preference):

(1) FLIR – Stock closed Friday at $23.08.  BL is $23.95.  Stock is trading in
the middle of the V and hasn’t ran up a great gob from its 52-wk low of $18.81. 
Looking at doing an ITM buy/write on the SEP $22.5 calls with a net debit of
$21.90.  That would give me an ROIC of around 2.6%.  Not great, but given the
low volatility of late, I’ll take it.

(2) SYK – Stock closed Friday at $41.76, over the BL of $40.36.  Stock is well
off its 52-wk low of $30.82 but is still solidly in the V.  This is a first
class company.  However, for trading purposes I would like it alot more if it
were less than $40.  I’m considering opening a small position by buying at the
market and selling the ATM $42 calls for $1.00.  This would give me an ROIC of
2.97%.  Again, not great, but I’m not willing to trade the riskier stocks in
this market just for higher yield.

(3) BLUD – Stock closed Friday at $18.46 well above the BL of $16.88.  I would
like this one alot more if it had options available in $1 increments.  The SEP
$20 calls are too far OTM to have any premium and the ITM SEP $17.5 calls don’t
yield much either.  If I decide to do a trade in BLUD I suspect I’ll write the
ITM SEP $17.5 calls which at current prices would give me an ROIC of 2.11%.

(4) TK – Stock has run back up to $18.90.  I’m considering selling the SEP $17.5
NPs for $0.40.  That has an ROIC of 2.29%.  More than likely though I’ll hold
off doing this trade and see if I can get a better price on a down day. 
Ideally, I’d rather be selling the SEP $15 NPs.

(5) AA – Sell NPs on the SEP $11 puts for $0.22 or better.  Stock is well
extended above it’s 52-wk low but is still in the V.  However, it is above the
BL.  The PF for the SEP $11 puts is OK at 1.6.  Stock has negative net cash.   (Many thanks to Rich for posting his comments and for pointing out AA to me).

I also looked at re-selling NPs on IPI and O but didn’t like the risk/reward
ratios at any strike price. 

Regards,
Troy

3 Responses to “Potential September Trades”

  1. Master How-to said

    Thanks for sharing your insightful prediction. I wish we could make better trading next month. Visit me Master Howto

  2. MTRIG said

    Troy, excellent post and a great overview of Ron’s software! Keep up the great work on your blog.

  3. mounddweller said

    MTRIG,

    Thanks and welcome to my blog! You’ll notice each month I also start a thread for others to post their trades. It is appropriately titled “What Others are Trading”. I look forward to reading your thoughts on trades you are considering as well as any other comments you may have on my other posts.

    Regards,
    Troy

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

 
%d bloggers like this: