The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘HPQ’

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.

Regards,

Troy

 

 

Posted in Weekly NP Strategy | Tagged: , , , , , | Leave a Comment »

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: http://finance.groups.yahoo.com/group/weeklyoptions/files/.

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.

Regards,

Troy

 

Posted in Weekly NP Strategy | Tagged: , , , , , | Leave a Comment »

Weekly NP Strategy – OCT 28 Results

Posted by mounddweller on October 28, 2011

Fellow Traders,

Last week I chose 3 trades from our Weekly NP Strategy selections.  You’ll recall my 3 chosen trades involved AA, HPQ, and SLW.  Let’s take a look and see how the trades turned out.

First up is Alcoa (AA).  When I selected AA it was trading at $9.95 and the OCT28 $9 put was trading at $0.05 bid.  Today, AA closed well OTM at $11.57.  Before commissions the ROIC for the 8 day holding period was 0.56%.  Annualized that comes out to 25.35%.

Next up is Hewlett Packard (HPQ).  You’ll recall HPQ has had a difficult time of late.  Shoddy management with poor decision making and a volatile market had driven it down to levels not seen in quite some time.  Because of this I felt comfortable selecting it as a potential trade.  When I selected HPQ it was trading at $24.74 and the OCT28 $23 put was trading at $0.21 bid.  HPQ closed today at $27.95.  Our 8 day ROIC was 0.91%.  Annualized this return is an outstanding 41.66%.

Last, we have Silver Wheaton (SLW).  SLW has been on a roller coster ride as well as it closely tracks the price of silver.  When I selected this trade SLW had closed at $29.09 and the OCT28 $25 put was at $0.15 bid.  Today SLW closed at $35.97.  The 8 day ROIC was 0.6%.  Annualized this comes out to a very respectable 27.38%.

Clearly, if one can consistently find trades like these a Weekly NP Strategy can generate a significant return.

Well, that’s it for today.  I’ll be back later this weekend with the Deep OTM NP Strategy NOV Week 3 selections.

Regards,

Troy

Posted in Weekly NP Strategy | Tagged: , , , | 1 Comment »

Weekly NP Strategy – OCT 28 Exp

Posted by mounddweller on October 20, 2011

Fellow Traders,

I have three picks for you this week from our Weekly NP Strategy.  None have looming earning releases.  Here are my three choices this week:

First up is Alcoa (AA).  AA has already announced 3rd quarter earnings.  It has declined steadily since hitting a 52-wk high back in April.  It seems to have found a bottom, closing at $8.90 back on October 3rd.  Will it retest this low before expiration next week?  Who knows?  However, I think it is a fair bet.

Next up is Hewlett-Packard (HPQ).  It doesn’t announce earnings until November 21st.  HPQ as you’re probably aware has had a terrible year.  Since late February it has fallen from the high $40s to a low of $22.20 back on October 3rd.  HPQ closed today at $24.74.  We can sell the $23 strike for $0.21.  Almost 1% for one week of exposure on a stock that is already down 50% this year seems like a reasonable bet to me.

Last up is Silver Wheaton (SLW).  SLW doesn’t report earnings until early November.  It closed today at $29.73.  It has not closed below the selected $25 strike price since November 15th of last year.

Well, that’s it for this week.  I’ll be back this weekend to look at our monthly Deep OTM Strategy results and also look at our November selections.

Regards,

Troy

 

 

Posted in Weekly NP Strategy | Tagged: , , , | 1 Comment »

Weekly NP Strategy – OCT 7 Expiration Results

Posted by mounddweller on October 8, 2011

Fellow Traders,

Last week you’ll recall I suggested  5 NP trades that looked worthy of your further due diligence and possible selection.  I suggested trades in the following:

CSCO at the $15 strike,

HPQ at the $21 or $22 strikes,

MSFT at the $24 strike, and

SLW at the $25 strike.

I’m happy to report each of these trades finished OTM by a significant margin.  Thus far, knock on wood, since launching this strategy I haven’t suggested a single losing trade.  The markets are being kind to me.  Let’s hope it continues.

Regards,

Troy

Posted in Weekly NP Strategy | Tagged: , , , , | 3 Comments »

Weekly NP Strategy – OCT14 Exp

Posted by mounddweller on October 6, 2011

Fellow Traders,

Once again the market has exhibited its schizophrenic behavior.  After dropping sharply it has once again jumped up above 11,000.  Consequently, I am hesitant to recommend anything from the weekly NP selections this week for fear it will drop right back down again next week.  In this environment it is better to sell puts on a huge down day.  Thus, here’s what I’m planning to do.  If tomorrow is a down day I may consider some of the blue-chip names on the list.  I’d really like to sell some puts tomorrow because Monday is a holiday and the market will be closed.  That gives us one less day of exposure before expiration next Friday.  If tomorrow is an up day I’ll likely write this week off and look ahead to the last week of the monthly expiration cycle.

Here are the blue-chippers from the list that I’ll be keeping an eye on:

CSCO  – stock seems to have found a bottom.  Would look to sell the $15s.

INTC – doubtful it will fall enough to generate any meaningful premium on the $20s.  Not interested in selling puts at $21 or higher

BP – Would be interested in selling the $34s if BP sold off again.

HPQ – Might consider the $22s if the price was right.

That’s about it folks.  Even though 197 trades meet our selection criteria there isn’t much that appeals to me in this market.  I have posted the complete list of possible trades out on the Yahoo Weekly Options group board.  You can find it here: http://finance.groups.yahoo.com/group/weeklyoptions/files/

Regards,

Troy

Posted in Weekly NP Strategy | Tagged: , , , , | Leave a Comment »

Weely NP Strategy – OCT 7 Exp – Updated

Posted by mounddweller on September 30, 2011

Fellow Traders,

I had a few minutes to look through the file.  Below are a few selections I think have merit and warrant further due diligence.

Regards,

Troy

Posted in Weekly NP Strategy | Tagged: , , , , | Leave a Comment »

Deep OTM NP Strategy – OCT Week 4

Posted by mounddweller on September 25, 2011

Fellow Traders,

Lots going on this weekend and a huge number of selections delayed my completing the analysis needed to get this post out to you.  This week we have 223 selections from which to pick good NP trades.  Obviously 223 selections is way too many to list out in my post.  Thus, this week I’m going to try something new.  I’m going to post my spreadsheet out in the files section of the  CoveredCalls-NakedPuts_OptionStrategies group on Yahoo.  You can find it here: http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/.

Of the 223 selections listed I found 3 that interested me.   They are BBT, HPQ, and RIG.  None of these are risk-free trades.  Given what is going on in the world and the market’s corresponding volatility all of these could easily fall below the selected strike prices.  The reason I selected these three is because I felt they had already fallen a great deal and thus MIGHT be closer to finding a bottom than other stocks which are still closer to their recent highs.  Also, I believe these are all good quality stocks.  BBT is a great, well managed regional bank,  HPQ is facing all sorts of uncertainty and turmoil and now has its second new CEO in a very short time.  However, it is also a great franchise and has now been beaten down to levels not seen since May 2005.  RIG has been beaten down as the price of oil has fallen in anticpation of a slowing global economy.  It is close to lows last seen during the BP oil rig disaster and the market bottom of 2008.

Let’s look at each one of these a little bit closer.  First, BBT.  BB&T Corporation operates as a financial holding company for Branch Banking
and Trust Company that provides banking and trust services to individuals and businesses.  It was founded in 1906 and is headquartered in Winston-Salem, North Carolina.  BBT was a selection of mine fairly recently.  You can read my write-up about it here: https://troysmoneytree.wordpress.com/2011/08/21/deep-otm-np-strategy-sep-week-4/.  The current trade that met our selection criteria is the OCT $17 strike price.  BBT closed Friday at $20.86.  The premium on the $17 strike is $0.31 bid.  This gives us a 1.82% ROIC with 19.99% of down side protection (DSP).  The one-year chart for BBT is below.

Next is Hewlett Packard, HPQ.  H  P, as it is commonly known is a technology conglomerate.  It operates in many, many sectors of the technology industry.  It manufactures hardware, and software, and also provides consulting services.  It was founded in 1939 and is headquartered in Palo Alto, California.   Because of the internal turmoil and the uncertainty surrounding its future direction it is dirt cheap.  It trades at less than 6x trailing earnings and 5x estimated forward earnings.  It also trades at 1.18x book value.  It is rare for a company like HP to trade anywhere near book value.  Now as I’ve said many times none of this means a stock can’t fall further.  Also, it is also readily apparent that HP has yet to hit bottom and begin any kind of recovery.  Take a look at the one-year chart shown below.

The NP trade I’ve selected for HP is the OCT $18 strike.  The stock closed at $22.32 on Friday.  The $18 strike gives us 20.47% of DSP.  The premium of $0.25 gives us a 1.39% ROIC with 29 days to expiration.  The $18 strike is also below HP’s current book value of $19.39.  I firmly believe HP will eventually get its act together and the stock price will rise accordingly.  Thus, I am happy to own it at less than book value.

Last up is Transocean, RIG.  Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services. The company also offers well and logistics services. It was founded in 1953 and is based in Zug, Switzerland.

Almost of the oilfield services companies have fallen off a cliff lately.  RIG is no exception.  Since March it has fallen 40% from a high of $85.35 to Friday’s closing price of $51.21.  It now trades well below its book value of $65.35.  It is also trading at less 9x estimated future earnings.  It recently implemented a new quarterly dividend policy.  It now pays an annual dividend of $3.16.  At Friday’s closing price, that is a yield of 6.1%.

The NP trade which meets our selection criteria is the OCT $42.50 put.  The premium is $0.80.  This gives us a 1.88% ROIC with 18.57% DSP.  RIG has not traded at the $42.50 strike price since January of 2005.

Well, that’s it for this week.  I encourage you to do your own deep due diligence on these three selections or any other that you find in the list before placing any trades.    Given the uncertainty in the market there is no telling how low any of these stocks may go and thus it is more important than ever that you be comfortable owning any company in which you place a trade.

Regards,

Troy

 

Posted in Deep OTM NP Strategy | Tagged: , , , | Leave a Comment »