The Money Tree

Safely Generating Income in Retirement

Deep OTM NP Strategy – SEP Week 1

Posted by mounddweller on September 9, 2011

Fellow Traders,

Well, another interesting week, huh?  We went out with a bang.  Depending on events which may occur this weekend, next week may be even more exciting.

This week I have 13 selections which passed the Week 1 criteria (i.e., > 10% DSP, PF >= 2.0).  They are provided below.

As you can see I have highlighted one, Manpower, as a possible trade.  However, given the extreme uncertainty in the market I would suggest passing on this one as well.  But, for those just itching to put money to work in the market here’s what caught my eye about Manpower.

(1) The $30 strike price is very near 2008 bear market lows so that might give some comfort that it is close to bottoming out.

(2) The $30 strike price is less than the current book value of $31.20.

(3) The company pays a small but growing dividend.  The dividend has increased 25% over the past 5 years.  Not great but some consolation if you have the stock put to you.

(4) If you have the stock put to you and you choose to hold it, it has tremendous upside potential if and when the economy begins to pick up steam.  In July of 2007 (when the economy was booming) this was a $90 stock.  As recently as earlier this year it has been as high as $70.

Well, that’s all I have for you this week.  Be careful out there.  Remember, it’s return OF investment that’s of paramount importance.  Return ON investment is second.

Regards,

Troy

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