The Money Tree

Safely Generating Income in Retirement

Weekly NP Strategy – 12/30/2011 Expiration

Posted by mounddweller on December 22, 2011

Fellow Traders,

The screener only returned 40 possible trades for the 12/30/2011 expiration period.  As usual I will post the list of possible trades out on the Yahoo Weekly Option Group board which you can access here: http://finance.groups.yahoo.com/group/weeklyoptions/files/.

Only 1 of the 40 possible trades was the least bit interesting to me.  That one trade is the YHOO put at the $15 strike price.  It has a bid price of $0.19.  This equates to a 1.27% ROIC with 8 days to expiration.  DSP is 7.44%.

YHOO has been bouncing between approximately $15 and $16 since August.  I feel YHOO is a decent trade right now because activists are once again pressuring the board of directors to take action to unlock value in the company.  The latest news is that YHOO is considering selling off their equity stakes in Yahoo Japan as well as internet properties in China.  Doing so could generate up to $14B for Yahoo which today has a total market cap. of $17B.  After subtracting out Yahoo’s substantial cash reserves this effectively values the US portion of the company at ZERO.  Clearly Yahoo is worth more than zero.  I believe this speculation about possible asset sales will act as a support to Yahoo’s stock price.

May you and yours have a very MERRY CHRISTMAS!

Regards,

Troy

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