The Money Tree

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Posts Tagged ‘IDCC’

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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Weekly NP Strategy – OCT 22 Exp

Posted by mounddweller on October 13, 2011

Fellow Traders,

Below are my selections for the Weekly NP Strategy this week.  There were over 1300 selections that met our basic criteria.  Obviously I didn’t have time to dig deep into all of them to pick the ones I liked.  Thus, the ones below were selected with minimal due-diligence.  I primarily selected large caps, paying a dividend, where the strike price is less than the recent market lows.

Best of luck trading in the coming week.

Regards,

Troy

 

 

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Deep OTM NP Strategy – AUG Week 4

Posted by mounddweller on July 23, 2011

Fellow Traders,

Below is the list of selections for this 4th week of the August option cycle.  You’ll notice it is very slim pickings.  So much so that I have nothing to recommend.

However, before I sign off for another week I would like to briefly discuss the status of the two potential trades I highlighted last week, IDCC and RVBD.  First the good news, IDCC soared this week after it was announced that Google was talking to IDCC about buying the company.   A week ago, Friday (7/15) IDCC closed at $43.01.  Yesterday (7/22) it closed at $72.96.  If you haven’t done so already I highly recommend buying back your puts and closing out the position.  What goes up might possibly fall just as fast.  Take the money and run!

Now, for the bad news (or at least not so good news).  RVBD fell dramatically this past week after announcing they were purchasing a company named Zeus at a sky-high price of 10x sales.  Mr. Market feels RVBD is grossly overpaying and let their opinion be known by selling in earnest.  The stock fell from around $39 last Friday to close this Friday at $32.12.  For those of you who sold the AUG $32 puts I would exercise some patience and see how the situation plays out.  The stock has good support around $32 and has recovered back above our strike price after falling as low as $31.09 on Thursday.  However, it RVBD reverses courses and begins going back down I wouldn’t hang around.  I would buy back the puts for a loss and move on.

Regards,

Troy

 

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Deep OTM NP Strategy – AUG Week 5

Posted by mounddweller on July 17, 2011

Fellow Traders,

As is usually the case we have a wide selection of trades to consider in this the first week of the new expiration cycle.   Please also notice that this is one of the 4 times a year when we have a 5-week cycle.  Here is our list of opportunities this week:

As you can see I have highlighted the two opportunities that I think are worthy of your further consideration.  Both IDCC and RVBD have appeared previously in the selection list.  I also have written about them before.  You can read those write-ups here

IDCC: https://troysmoneytree.wordpress.com/2011/05/29/deep-otm-np-strategy-june-week-3/

RVBD: https://troysmoneytree.wordpress.com/2011/02/25/otm-np-strategy-mar-week-3/

Both selections have good support at their respective strike prices.  However, if I had to choose one over the other I would go with IDCC.  It trades at a more reasonable P/E and pays a small dividend.  If the market hits a rough patch and I were to have IDCC put to me I would feel more comfortable than I would with RVBD which trades at a very rich forward multiple of 33x earnings.

Have a great week!

Regards,

Troy

 

 

 

 

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Deep OTM NP Strategy – JUL Week 3

Posted by mounddweller on June 26, 2011

Fellow Traders,

Below is the list of selections for this week (JUL – 3 Weeks to Expiration).

Only one caught my eye.  That is Lorrilard (LO).  LO is a company that I’ve written about previously.  It is a very old tobacco company.  It specializes in menthol flavored cigarettes.  You can read more about it in my original write-up from a few months ago here: https://troysmoneytree.wordpress.com/2011/02/25/otm-np-strategy-mar-week-3/

It is trading a bit higher now than it was back then and the market is a bit shakier so this isn’t quite the ‘no-brainer’ trade that it was back in March.  However, I still think this is a relatively low risk trade.   The $95 strike is below recent support.  In addition, if LO does fall and you find yourself owning it at $95 you will own a 250-year old company with a 5.5% dividend yield.

Here is an updated one year chart for LO:

Best of luck to all this week.

Regards,

Troy

PS.  IDCC, which appeared on our list last week still looks good.  The JUL puts have a PF > 2.0  at all strikes between $30-$33.

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Deep OTM NP Strategy – JUNE Week 1

Posted by mounddweller on June 12, 2011

Fellow Traders,

It’s been a busy week at my house.  My oldest son graduated from high school yesterday.  Thus, the week was filled with preparations for the obligatory ‘open house’ and arrival of out-of-town relatives, some of which are still here.  Thus, my investment analysis and subsequent write-up in this post will be short and to the point.

Here are the trades that met our  selection criteria for this last week before JUNE expiration.

None of these selections peaked my interest.  None are ones I’d be willing to hold should they fall and expire ITM.  Given the current market conditions that is a critical consideration.

Several selections from earlier this month also passed our Week 1 screener.  RIMM is one.  It closed Friday at $36.56.  For the week it was down $2.42 (6.21%).  Both the JUN $32.50 and $30 strikes meet our JUN Week 1 criteria.  The puts closed Friday $0.46 and $0.16 respectively.  With the $32.50 strike you get 12.36% DSP.  This trade yields 1.4% ROIC with one week to expiration and has a PF of 5.3.  The $30 strike has 18.38% DSP, a 0.53% ROIC, and a PF of 3.5.

Another selection from earlier this month which reappeared this week is IDCC.  It closed Friday at $35.91, down $1.97 (5.2%) for the week.  The $32 strike at $0.30 has 11.72% DSP with a ROIC of 0.94%.

Well, that’s it for this week for our Deep OTM NP Strategy.  If time allows I’ll be back later in the day with another post updating my CSCO NP trade.

Regards,

Troy

 

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Deep OTM NP Strategy – JUNE Week 3

Posted by mounddweller on May 29, 2011

Fellow Traders,

We’ve got a short trading list this week to go along with our short trading week.  Only 4 stocks met our selection criteria.  I’ve got to think this is a good leading indicator of a possible correction in the near future.  When everyone wants to be on one side of the trade that tells me the end is near.

Here are the four selections for this week.  Only one, IDCC, interests me.

IDCC is the business of liscensing their extensive portfolio of telecommunications patents.  They recently announced their second quarter revenue would be less than originally expected.  This caused the stock to fall substantially as you can see in the chart below.

The stock appears to have  found support at just above $40.  It bounced off of this support back in March and it appears to want to bounce off it again now.  That’s my primary reason for liking this trade.  Fundamentally the stock is sound.  It trades for a reasonable 14x earnings and has over $11/share in cash on its balance sheet.

The $36 strike gives us over 16% of DSP.  The $0.60 premium gives us a ROIC of 1.67%.  Not bad for a three week holding period.

Good luck trading this week and keep in mind what I said earlier, I think we could see some near term weakness very soon.

Regards,

Troy

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Deep OTM NP Strategy – APR Week 4

Posted by mounddweller on March 20, 2011

Fellow Traders,

We have a total of 38 selections meeting our Week 4 criteria.  However, I don’t think all 38 are worthy of our risk capital.  As I mentioned in my MAR results post I think it is imperative, given the current market volatility, that we become more selective in what we choose to trade.  So, while I am posting the entire list of 38, I would like to highlight a few that caught my eye as having a good risk/reward profile.

Running down the list the first stock that caught my attention was Interdigital Communications (IDCC).  It closed Friday at $42.01.  The put I’m interested in is the $35 strike.  It has a bid price of $0.60 giving us a ROIC of 1.71% with 18.11% DSP.  Some will take one look at the chart and immediately wonder if I am out of my mind.  The stock had a strong run up from $25 to 57.50 and has since fallen sharply back to the low $40s.   But if you look closely you can see the stock is trying to find a bottom and that the money flow has bottomed out and is beginning to recover.  That technical indicator coupled with the stocks excellent fundamentals makes it a worthy candidate for an NP trade.  IDCC has a net margin of almost 40%!  Yes, you read that correctly, 40%.  It also boasts almost $12/share of cash sitting on its balance sheet.    It currently trades at about 12x trailing earnings.

The second stock that caught my eye was LDK Solar (LDK).  This is a stock I successfully traded under similar circumstances back in late November.  Friday, the stock closed at $11.47.  The APR put at the $9 strike closed at $0.15.  This gives us a 1.67% ROIC with 22.84% DSP. 

The third stock I noticed is one that was on our list last month as well, Rambus (RMBS).  We all know the technology stocks have been taking a beating of late.  Rambus is no exception.  In the past few weeks it has fallen from just over $22 to almost $18.  Friday it closed at $19.06.  The $16 put is at $0.36 bid.  This yields an ROIC of 2.25% and 17.94% DSP.  The $16 stike is below the 52-wk low of $16.94.

I also found three other stocks on the list which I feel are worthy of your consideration.  They are AGO, TSL, and WFR.  AGO insures bonds, while TSL and WFR are solar related stocks.

Best of luck to everyone this month.  I think we are in for quite a ride. 

Regards,

Troy

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