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Posts Tagged ‘GME’

New Trade – Another Round of GME

Posted by mounddweller on August 20, 2012

Fellow Traders,

My apologies for the sparcity of postings of late.  I’ll try to do better in the coming weeks.

Today I’d like to tell you about my most recent trade in GME.  However, before I do that I need to update you on the results of my previous GME trade.  You’ll recall I originally entered this trade back on June 1st by selling 6 JUN $18 puts.  The details are posted here: https://troysmoneytree.wordpress.com/2012/06/01/new-trade-gme/.  GME ended up moving against me and I had to work to manage myself back into a profitable position.  My interim trades are discussed here: https://troysmoneytree.wordpress.com/2012/07/25/trade-update-gme/.   This past weekend my AUG $17 calls were called away and I ended up making 2.43% over 80 days which annualized comes out to just over 11%.  Not great but not bad either.

So, now let’s discuss my new trade.  I did a buy/write.  I bought 500 shares of GME at $18.59 and sold 5 SEP $18 calls at $1.08.  Why was I so interested in getting right back into GME after having to work to get myself out of it?  Well, primarily I saw the opportunity to capture a good call premium while at the same time setting myself up to capture GME’s next dividend.

GME recently announced they were raising their quarterly dividend to $0.25/share.  The stock goes ex-dividend on 8/28 so you still have time to enter a trade if you’re interested.

With the $0.25 dividend, assuming I am called away at $18 next month my ROIC will be 3.98%.  If I get called away before the stock goes ex-dividend my ROIC will be 2.64% in about 8 days.  Either way I like the trade.

Now, I know a lot of people have concerns about the long-term prospects of GME.  People see it going the way of Blockbuster.  However, I see it differently.  I don’t think the video game industry is going away.  I just think they’re in a lull right now.  There haven’t been any new gaming platforms released in the past couple of years.  Once the next release of Xbox or Wii comes out we’ll be off to the races again.

GME is well managed.  They have no debt, signifcant cash on their balance sheet, and are buying back shares at great prices.  I will continue to buy and trade GME when they slip under $20/share.

Regards,

Troy

 

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Trade Update – GME

Posted by mounddweller on July 25, 2012

Fellow Traders,

I want to give you an update on my GME trade.  You’ll recall I originally opened this trade by selling 6 JUN $18 puts.  As JUN expiration approached I rolled half of my position out to JUL $18 and the other half down and out to the JUL $17.  Earlier this month I bought to close the $18 puts.  At JUL expiration I decided to let the stock be put to me at $17.

Today I sold to open the AUG $17 calls for $0.28.

If my stock is called away at AUG expiration I will close the position with a small net profit equal to a ROIC of 2.36%.  If the calls expire OTM I will continue to sell calls until called away.

Regards,

Troy

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New Trade – GME

Posted by mounddweller on June 1, 2012

Fellow Traders,

Wow!  Volatility has returned has it not?  The bad job creation numbers released today by Uncle Sam gave Mr. Market an excuse to sell-off in a big way.  However, that’s not the reason for me writing this post.  Rather, I want to tell you about a trade I placed earlier today.

Today I entered a new trade in an old favorite of mine, Gamestop (GME).  Long-time readers of my blog will recall that I have successfully traded GME several times over the past few years.  Let me briefly give you the specifics of my trade then I’ll explain why I did it.

Here’s my trade: STO 6 GME JUN $18 puts at $0.27.   That’s a 1.5% ROIC with just 15 days to expiration and 7.7% DSP.

So why did I do this trade?  Well, first let’s look at Gamestop’s fundamentals.   It has a trailing P/E of 8.02 and a forward P/E of 5.68.  It is trading at 85% of it’s book value ($22.57).  GME has zero debt and $2.49/share of cash sitting on the balance sheet.  And last, but not least it pays an annual dividend of $0.60/share (3.1% at todays closing price).

Now, let’s take a look at the technical side of the equation.  The 52-wk low is $18.13 which was hit just a couple weeks ago on May 18.  The 5-yr low occurred back on February 22, 2010 at $17.20.  Below is a 3 year chart.  You can see GME has strong support at $18.  It has bounced off of this level several times.

I’ll wrap up my post by saying I believe Gamestop is a solid company with good future business prospects.  I would be happy to own it at $18.

Regards,

Troy

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SEP Closed Positions

Posted by mounddweller on September 18, 2011

Fellow Traders,

I finally was able to catch up and update the Historical Results and Open Positions pages of my blog.  I encourage you to take a look.  Also, I wanted to take a moment to post the trades I closed between the AUG and SEP expiration.

As you can see I closed 7 trades this month.  All were cash secured naked put trades.  Premiums received (net of commissions) totalled $1,040.82.  My maximum amount of capital at risk during the month was $73,500.  This equates to a ROIC of 1.42%.

I’m hopeful I will be able to take advantage of similar opportunities as they present themselves between now and OCT expiration in 5 weeks.

Regards,

Troy

 

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Deep OTM NP Strategy – SEP Week 4

Posted by mounddweller on August 21, 2011

Fellow Traders,

Many of you may recall my surprise a couple of weeks ago when I announced that there were 88 selections to choose from that week.  Then again last week there were 78 selections.  Well, we’ve now blown those records clean out of the water.  This week there are 414 selections that met our Week 4 criteria.  That is way too many for me to include in a blog post.  Thus, this week I’m going to depart from my normal process and only list the selections that caught my eye and that I think are worthy of your further due diligence.  If anyone is interested in seeing the complete list just leave a comment to this post and I’ll send you a spreadsheet with all 414 selections.

The first thing you’ll notice is that all but one of the selections that interested me are all large-caps.  This is not an accident.  In this type of market I’m only interested in trading stocks that I have no doubt will be around long after this latest crisis has passed.

First up this week is AFLAC (AFL).  I wrote about AFL last week so to avoid repeating myself and boring you I won’t say much about it.  However, last week I shared with you the 1 year price chart.  This week I want to show you the 5-year price chart so you can get a sense for where the stock might go if we encounter another crisis like we had in 2008.

Next on our list is Applied Materials (AMAT).  AMAT provides manufacturing equipment, services, and software to the semiconductor,
flat panel display, solar photovoltaic (PV), and related industries worldwide.   Applied Materials, Inc. was founded in 1967 and is headquartered in Santa Clara, California.

I like AMAT a lot.  It is the very first stock I ever sold an option on.  I have wanted to circle back to it for a long time but felt it was too expensive.  Now it has appeared on my Deep OTM NP selection screen.  I’m going to give it a strong look.   AMAT has a strong balance sheet with $2.35/share in net cash.  It trades at 9.1x trailing earnings and 8.2x expected earnings and it pays $0.32 annually in dividends.  At the $9 strike price that is a 3.56% dividend yield.  I would be very happy owning it at $9.

Again, I’m going to show you the 5-yr price chart.  In this case you can see AMAT is not too far from it’s 2008 lows.  That doesn’t mean it can’t go lower than that but in my opinion it does make it less risky than some other stocks which remain a great distance from their 2008 lows.

BB&T (BBT) is the next selection that caught my eye.  It caught my eye for a couple of reasons.  First, earlier this week it was a featured selection in an investing newsletter to which I subscribe.  Second, the put option on BBT that we are interested in has 33% DSP and again is very close to lows encountered in the 2008 financial crisis.  The $13 strike price has a 1% ROIC.

BB&T Corporation operates as the financial holding company for Branch Banking and Trust Company that provides banking and trust services to small and mid-size businesses, public agencies, local governments, and individuals in the United States.   As of May 17, 2011, it operated approximately 1,800 financial centers in North Carolina, Virginia, Florida, Georgia, Maryland, South Carolina, Alabama, Kentucky, West Virginia, Tennessee, Texas, Washington D.C., and Indiana. The company was founded in 1906 and is headquartered in Winston-Salem, North
Carolina.

In the interest of time and the length of this post I am going to leave the rest of the list for you to review and do further research on.  However, for those of you interested in Gamestop (GME) I will remind you that I have written about it in my blog before.  Typing GME in the search box will provide you with a list of my prior posts.

Best of luck to everyone in their trades this week.

Regards,

Troy

 

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New NP Trades

Posted by mounddweller on August 18, 2011

Fellow Traders,

I entered three new NP positions today.  One is a weekly, the other two have a regular SEP expiration.  Below are the details of my trades:

First, let’s look at my Gamestop (GME) trade.  Long-time readers of my blog know that I’ve traded GME several times over the past few years.  It is a stock I’m comfortable trading at the right price.  Yesterday, after the market close they announced quarterly earnings.  Analysts weren’t happy with what the initially saw in the press release and the stock sold off hard at the open this morning.  Luckily, I was paying attention at the right time.  I was able to sell the SEP $18 puts for $0.65.  This all happened within the first hour of trading this morning.  Later in the day analysts (probably after the earnings conference call) formed a different opinion and the stock recovered swiftly, closing at $21.43 up 4.94%!  My ROIC for this trade is a very nice 3.49% with 16% DSP (based on the closing price of $21.43).

Next up is INTC.  I’ve been wanting to get back into an INTC trade for sometime now and finally today the opportunity presented itself.  I STO 5 AUG26 $19 puts at $0.20.  In my humble opinion INTC is a great buy at $19 so I have no qualms selling puts at that level regardless of market conditions.   If INTC holds above $19 my one-week ROIC will be 0.94%.  Annualized that’s north of 50%.

Last, but certainly not least, is another blue-chipper, JNJ.  I STO 2 JNJ SEP $57.50 puts at $0.62.  My ROIC for this trade is right at 1.00% with 8.96% DSP.  The reason I like this trade comes from my review of the 2-year price chart.  JNJ exhibited strong support at $57.50 during the sell-off last summer.

Other stocks I’m keeping an eye on for a possible NP trade are: T, ABT, MDT, CSCO, AFL, WMT.  You’ll notice all are solid blue-chip companies.  Now is not the time to gamble with anything but the very best.

Regards,

Troy

 

 

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MAR Wrap-up and New APR Trades

Posted by mounddweller on March 20, 2011

Fellow Traders,

Like many of you I’ve spent a good portion of this weekend reviewing how I did in March and looking for potential April trades.  Here’s a brief recap of my March activity.  First, my closed trades:

(1) Back on February 4th I sold 4 MRK MAR $31 puts at $0.35.  After commissions I netted $128.03.  These puts expired OTM.

(2) On February 28th I sold 3 RVBD MAR $35 puts at $0.45.  After commissions I netted $123.77.  This was one of my Deep OTM NP Strategy selections.  The puts expired OTM.

Now, onto my trades which remained open.

(1) First Exelon (EXC).  I started this trade almost one year ago, back on April 16th.  My most recent activity includes selling 2 APR $43 calls at $0.90 and then buying them back late last week at $0.30.  Also, earlier this month I sold 3 APR $40 puts at $0.50.  Between selling calls and puts, and the dividends received I have reduced my cost basis from $42.50 to $37.46.

(2) Next up is Hugoton Royalty Trust (HGT).  This is my third trade in HGT.  The first two were very successful.  I initiated this third trade back on March 1st, buying 500 shares of HGT at $21.50.  On March 17th I sold 5 AUG $22.50 calls at $0.80.    The strategy with HGT is to buy the shares, sell calls 4-6 month out, and then collect monthly dividends.

(3) CSCO is my next open position.  Back on February 10th I opened this trade by selling 5 MAR $18 puts at $0.21.  On Friday I rolled these puts out to JUN for a $0.70 net credit.

(4) NOK is up next.  I did a buy/write on them back on March 11th at a net debit of $8.17.  I sold the APR $9 calls. 

(5) My remaining open position is in Getty (GTY).  On March 14th I sold 5 MAR $22.50 puts at $0.55.  These puts expired ITM and thus I will have 500 shares of GTY put to me at $22.50 on Monday morning.  My plan is to sell the JUN $25 calls at $0.75 and collect the $0.48 dividend which will be paid in mid-April.

Now onto my my list of potential trades for April.

Let’s briefly look at each of these.

(1) First up is Gamestop (GME).  You’ll notice I have them listed twice.  That’s because I can’t decide which trade I like better.  I like the ROIC with the $19 put and I have traded GME at this strike price with good results before.  However, I like the $18 strike because there is better support at this price.

 (2) Next is CSCO.  As I mentioned above I am already short 5 contracts at the $18 strike.  This trade expands my position by selling more puts at a much lower strike.

(3) Aflac (AFL) is my next pick.  It has fallen sharply because of the tremendous disaster in Japan where it does a lot of business.  It closed at $50.47 on Friday well off its 52-wk high of $59.54.

(4) JNJ is up next.  I ‘borrowed’ this pick from by investing buddy Teddi over at www.fullyinformed.com.  JNJ is approaching bargain territory so this is a good trade despite the sparcity of DSP.

(5) AT&T (T) is fast approaching their ex-dividend date and is trading at a nice price.  Thus, I’m happy to enter a buy/write trade here and reinitiate a position in T.

(6) Last up is GTY which I discussed up above.  As I said before I intend to sell CCs against the shares I’m acquiring tomorrow.  With a dividend yield in excess of 8% I won’t mind holding this one for awhile.

Best of luck to all my readers out there.  Let me know your thoughts on my trades and I would enjoy hearing what trades you’re considering.

Regards,

Troy

Posted in Portfolio Updates, Potential Trades, Troy's New Picks! | Tagged: , , , , , , , , , , , , | 4 Comments »

FEB Expiration – Results

Posted by mounddweller on February 21, 2011

Fellow Traders,

Just a quick post to update everyone on my trades that closed at expiration on Friday.  I had a number of NP trades  that closed OTM.  They are as follows:

As you can see one mistake can do a heck of a lot of damage to what otherwise was a good month.  So, lesson learned.  STICK TO YOUR GAMEPLAN!

Regards,

Troy

Posted in Portfolio Updates | Tagged: , , , , , , , | 1 Comment »

New NP Trades – T and GME

Posted by mounddweller on January 11, 2011

Investing Buddies,

I placed two new NP trades yesterday.  Let me tell you a little bit about them.  First off let me make it clear that neither of these trades are the result of new selections from my Deep OTM NP Strategy.  No, rather these trades come from two entirely different NP trading strategies.  In my mind that is the absolute beauty of trading naked puts.   Naked puts can form the basis for many types of trading strategies with differing objectives and risk profiles.

The first trade I would like to tell you about involves AT&T (T).  You’ll recall last week I had an early assignment of my JAN $29 calls due to another investor who wanted to capture the upcoming T dividend of $0.43.   Having been called away at $29 I immediately began to formulate a plan to rebuild a new position in T over time.  I accomplished the first phase of this plan by selling 2 FEB $28 puts at $0.58.  Now, with hind-sight being 20/20, it’s clear that I reentered the position a little early.  T fell again today and closed at $27.91.  However, since my goal is to establish a long-term position in T I’m not really concerned if I catch the very bottom in prices.  T is very cheap at this price, currently trading for 7.5x earnings and yielding 6%.  The next phase of my plan will be to sell another 4-6 NP contracts at lower strike prices, further out on the calendar.  My ultimate objective is to own 600-800 shares of T with a net yield of > 7.5%.

So let’s recap how I’m using NPs in this strategy to achieve my goals. I’m using naked puts to accomplish three things (1) generate immediate income (cash flow) in my account, (2) lower my eventual cost basis in AT&T when I accept assignment and have the stock put to me, and (3) and accumulate a long-term postion in AT&T.

This first trade generated $105.55 in cash flow, lowered my potential cost basis to $27.47, and if T closes less than $28 at expiration in February and I choose to accept assignment I will have acquired 200 of my total desired 800 share position.  My ROIC is 1.88% with 40 days to expiration.

Now let’s talk about Gamestop (GME).  My strategy and objective with GME is different from that of AT&T and different from the strategy and objectives of my Deep OTM NP Strategy.  My trade in GME is an opportunistic one.  I wanted to execute a trade in GME because the market offered me an attractive entry point and a favorable risk/reward ratio.   While I don’t necessarily want to own GME as a long-term core holding, I am not averse to holding it in my account for some period of time. 

I have traded covered calls and naked puts on GME several times in the past.  It is a stock I am comfortable owning when it approaches its book value which is currently $18.30.  For this particular trade I noticed that GME had fallen sharply from a recent high of just over $23 to down around $20.  In looking at the chart I also noticed that it had very strong support between $18 and $19.   So I decided to sell 5 FEB $19 puts at $0.38.

Again, my objective with this trade is to just take advantage of the recent sell-off in price and use it to generate income (cash flow) in my account.  This trade generated $177.30 (net of commissions) which equates to a 1.87% ROIC with 40 days to expiration.  If I choose to have the stock put to me at $19 I will own it at a net cost of $18.62, a mere $0.32 above its current book value. 

Regards,

Troy

Posted in Troy's New Picks! | Tagged: , , , | 4 Comments »

New Scan – Potential Trades (7/11/2010)

Posted by mounddweller on July 11, 2010

I ran a VISIONS Scout scan this afternoon.  I was pleasantly surprised at the outcome.  As many of you are painfully aware quality stocks meeting Ron’s criteria for selling Covered Calls (CCs) and Naked Puts (NPs) have been few and far between of late.  My scan this afternoon produced a list of 61 stocks that made it to level 4 on the Scout search engine.  Of these 28 had a Gold$ of 80 or higher and 8 had a Gold$ of 100!  A screen print of the those with a Gold$ score >= 80 is presented below.

Two of the 8 with a perfect Gold$ of 100 peaked my interest.  They are EJ and SQM.  Both are foreign companies, EJ is a Chinese real estate company and SQM is a Chilean mining company.  Another Chinese company that caught my eye, GAME, has a Gold$ score of 98.  Last but not least, one of my recent favorites is back on the list and caught my eye.  Gamestop (GME) is well down the list with a Gold$ score of 88 but has a nice looking chart. 

Look at the stocks that caught my eye and the other stocks on the list.  Perhaps you’ll see something I didn’t.  Let me know what looks interesting to you.

Good trading…

Troy

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