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Archive for May, 2012

Possible New Trades

Posted by mounddweller on May 20, 2012

Fellow Traders,

OK, I promise this is my last post of the day.  Four in one day is enough.  In this post I want to share a few of the trades I’m considering in the week coming up.

First, is Freeport-McMoRan Copper and Gold (FCX).  It closed Friday at $31.81.  Over the past two years it has bounced off of support at $30 twice.  The JUN $30 puts are at $0.94 bid.  The $29 puts are at $0.69 bid.

Second, is British Petroleum (BP).  It closed Friday at $37.10.  Other than during its Gulf of Mexico crisis a couple of years ago it has exhibited good support at $35.  The $34 put is at $0.40 bid.  My buddy Ed didn’t have much good to say about BP so I’m leary of this one.  However, someone who likes BP might find this to be a good trade.

Last, but certainly not least is Applied Materials (AMAT).  Some of you may recall I traded this one at the beginning of the year.  In that trade when AMAT was at $10.21 I sold the JAN13 $10 puts at $1.57.  One month later I bought to close the puts for $0.75.  AMAT is now back down $10.36.  The JAN13 $10 put is at $1.07 bid.  I like AMAT at $10 or less.  With this trade I make over 10% ROIC if I don’t have the stock put to me.  If I do have the stock put to me at $10, I will own it at a net cost of $8.11 (10 + 1.57 – 0.75 + 1.07).  With an annual dividend of $0.36 and a net cost of $8.11 I would own AMAT with a dividend yield of 4.4%.  I like this trade.

Other stocks I’m keeping my eye on if the market continues lower include: WM, INTC, ADI, GLW, WAG, and MCD.

Regards,

Troy

 

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Update – VXX

Posted by mounddweller on May 20, 2012

Fellow Traders,

I want to give you an update on my naked put trade on VXX.  I initiated this trade back on 2/29, selling the MAR $22 puts when VXX was over $24.  Since  then VXX has dropped to as low as $15.84.  I’ve continued to roll my puts, first to APR, then MAY.  Last week, although VXX has recovered substantially, it still looked like it was going to stay under $22.  Consequently, I rolled the MAY $22 puts out and down to the JUL $21 for a net credit of $311.05.  As it turned out I rolled a couple of days early.  VXX closed Friday at $22.36.  However, since I don’t posess the ability to see into the future, I’m still happy with my trade.  In just under three months I’ve taken in $1318.17 in premiums against my capital requirement of $11,000.

Regards,

Troy

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Update – Silver Wheaton (SLW)

Posted by mounddweller on May 20, 2012

Fellow Traders,

Here’s another update, this time on my position in Silver Wheaton (SLW).  You’ll recall I entered this trade on April 27th by buying 200 shares of SLW at $30.07 and selling two MAY $29 puts at $0.64.   This was my second trade using Ron Groenke’s new “Show the Trade”.  Like my CVX trade, it isn’t working out too well right now.  As a matter of fact I’ve already hit the stop loss limit on my long stock.  Back on May 7th the stock fell through my stop loss at $28.56.  By the time I sold it was at $27.45.  It subsequently fell to as low as $22.94.  It has since recovered a little, closing Friday at $24.63.  Thus, my use of a stop loss benefitted me greatly on this trade.

Like my CVX trade I decided to roll out and down my short puts.  On Friday I rolled my MAY $29 puts out to the SEP $28 puts for a net credit of $129.65.  This now leaves me a net loss of $293.40.  My plan is to continue to roll the puts as necessary to bring the whole trade to a profitable conclusion.

Here’s a current 1-year chart for SLW.

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Update – Dividend Superstar – Chevron (CVX)

Posted by mounddweller on May 20, 2012

Fellow Traders,

It’s been a couple of weeks since my post.  A lot has happened to my positions since then.  So today I hope to update you on all of them and also tell you about some possible trades I’m looking to set-up next week.

First up is an update on my CVX trade.  As you’ll recall CVX is my very first trade using Ron Groenke’s new “Show the Trade” functionality in his VISIONS software.  As luck would have it my first trade is not going as well as I’d hoped.  Back on April 26th I bought 100 shares of CVX at $105.59 and sold an additional MAY $105 put at $2.02.  You can read my initial write-up here: https://troysmoneytree.wordpress.com/2012/04/26/new-trade-dividend-superstar-chevron/.

The objective of this trade is to sell CVX at $114.04 or better and to have the put expire OTM.  The stop loss on the stock portion of the trade is $97.14.

Friday, the stock closed at $98.46.  To avoid assignment of the stock at $105 I rolled the MAY put out and down to the SEP $100 strike for a net credit of $119.85.  CVX was trading at around $101 when I rolled the put.  Late in the trading session the market fell apart and so did CVX.   To break-even on the whole trade I need to sell CVX at $102.46 or better.

My path forward is clear.  I will honor my stop loss at $97.14 on my long stock position.  However, I intend to roll the put as necessary to exit the position with a gain.  Below is a current 1-year chart of CVX.

Regards,

Troy

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What Others are Trading – May 2012

Posted by mounddweller on May 3, 2012

Fellow Traders,

My apologies, I believe I forgot to post an April edition of this post.  Let’s hear them, what trades have been working well for you, and maybe something that isn’t working out quite the way you planned?

Regards,

Troy

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Weekly NP Strategy – 05/11/2012 Expiration

Posted by mounddweller on May 3, 2012

Fellow Traders,

It’s that time of the week again.  My plane landed on time and I’m home and able to post my message about what I found in our Weekly NP Strategy query.  This week our query returned 75 possible trades.  Of these I think 3 of worthy of further consideration.  They are IDCC at the $25 strike, NVDA at the $12 strike, and RIG at the $48 strike.

IDCC sold off big earlier this week after missing anlaysts expectations.  NVDA is nearing support at $12, and RIG looks like a bargain at $48.

As always do your own due-diligence.

The remainder of the possible trades can be found here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Regards,

Troy

 

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