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Posts Tagged ‘AKAM’

Deep OTM NP Strategy – NOV Week 4

Posted by mounddweller on October 23, 2011

Fellow Traders,

There are a lot of selections for our Deep OTM NP Strategy this week. 378 of them in fact.  That’s way too many for me to easily post in my blog so as I’ve done before I have posted the entire list of selections out on the Yahoo CoveredCalls-NakedPuts_OptionStrategies group board.  You can find it here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

I have 7 trades for you to consider.  They are presented below.  I have to say it is hard to be excited about any of the trades I selected.  Here’s why…the market has rallied significantly over the past several trading days.  This has occurred despite the tremendous overhang of the European debt crisis and being in the middle of earnings season.  Thus, I feel a correction could be right around the corner.  On the other hand you have a lot of analysts saying we’re going to have a year-end rally.  So bottom line, nobody knows what is going to happen.  Thus, given all this uncertainty I remain skeptical and very cautious.

There are two stocks in this list that I’d like to highlight.  They are Dow Chemical (DOW) and Freeport McMoran Copper & Gold (FCX).  I’m highlighting these two because they are highly sensitive to the economic cycle.  If the worldwide economy continues to slow these stocks will continue to fall.  If the economy stabilizes I believe both these stocks are worth a look.  Let’s look at the 5-yr charts for DOW and FCX.

As you can see both of these stocks have remarkably similar charts.  Both fell into the single digits during the financial crisis in late 2008 and early 2009 only to soar 400-500% as the market recovered.  Both are bouncing after recently hitting 52-wk lows.  The strike prices for each of the trades on these stocks are at or below those recent lows.  In the case of DOW, the $22 strike price is near the recent low of $21.51.  For FCX the $29.50 strike price is below the recent low of $29.87.

Well, that’s it for this week.  Best of luck as we start this next trading cycle.

Regards,

Troy

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VISIONS Scan – Potential Trades

Posted by mounddweller on March 26, 2011

Fellow Traders,

Earlier this afternoon I ran SCOUT in VISIONS to see if I could unearth any interesting NP trades for the 3 weeks remaining before APR expiration.  17 stocks met Ron’s Level 4 selection criteria.  The “Top 10” were BBBB, AKAM, STP, STRA, LPL, ARO, CELG, ICLR, UMPQ, and CEPH.  Out of the “Top 10” I felt AKAM, STP, LPL, ARO, and CEPH were worth digging into deeper.

My objective in running the scan was to find stocks trading in Ron’s VISION V with APR puts that met the following criteria:

(1) Strike price at or less than recent lows, and

(2)  Premium that provided an annualized ROIC > 15%.

In the first chart below you can see that LPL was the only stock that met both of my criteria.  However, you’ll also notice it has < 4% DSP.  I didn’t like that so I decided to explore a little further and see how much I had to increase the strike price to attain my desired minimum ROIC.  The results of that analysis can be found in the second chart.  By relaxing my first criteria I was able to identify three trades that I felt might be a reasonable trade.  These are highlighted in green. 

Of these three ‘finalists’ I think CEPH is the best bet.  Looking at its price chart over a 1, 2, and 5 year period reveals that it has strong support around the $55 level.  STP and AKAM do not have strong support at my chosen strike prices.  STP has some support at $7 but as we saw earlier there is no premium at that strike.  Looking at the 1, 2, and 5 charts for AKAM reveals a very scary situation in that it hit lows of around $10 back in 2009. 

Here is the VISIONS 1-year price chart for CEPH.  I would also encourage you to go to Yahoo or another site where you can see the 5-year chart to see the strong support at the $55 price point.

Check these stocks out and let me know what you think about my selection criteria and my process of elimination.

Regards,

Troy

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