The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘FCX’

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.





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Weekly NP Strategy – NOV 11 Exp. Results

Posted by mounddweller on November 12, 2011

Fellow Traders,

You’ll recall last week I highlighted 5 of the 142 trades which met our NP Strategy selection criteria.  Below are the ticker symbols, strike prices, and yesterday’s closing price for each of the 5 trades.

AA  $10.00  $10.60

CSCO $17.00  $19.02

FCX  $36.00  $39.86

HPQ  $25.00  $27.58

WMB  $29.00  $31.34

As you can see all 5 of the trades I selected finished OTM.  Thus far since I started sharing my Weekly NP Strategy selections I don’t think a single one of my highlighted trades has finished ITM.  Now if I could only feel as confident as my record suggests I should.  I find it very hard to enter these positions.  I always find something to use to talk myself out of making the trade.

I hope everyone has a great week.  I want to let everyone know I’ve decided not to run the Weekly NP Strategy on the week before option expiration each month.  There are no true weekly options this week.  They simply are the regular options which expire on Saturday.





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Weekly NP Strategy – Nov 11 Exp

Posted by mounddweller on November 3, 2011

Fellow Traders,

Below you’ll find my 5 choices from our list of 142 possible trades.  I will post the complete list out on the Yahoo Weekly Options group board.  You can link to it here:

Alcoa, Freeport McMoran, and Williams have already announced earnings.  Cisco announces earnings next week, thus that is why the premium on the $17 strike is so high.  Followers of CSCO know that its past several earnings releases have resulted in significant price drops.  However, I think this time CSCO may have positive news to report.  I have nothing substantive to base my opinion on, just a gut feel.  Take it for what its worth.

Hewlett Packard doesn’t report earnings until November 21st.  I think it will trend upward until then.  The stock has been so beaten down that even if is put to you at $25.00 you would be buying it very near its recent lows.

Well, that’s all I’ve got time for this week.  Best of luck to everyone.




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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:

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.



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