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Posts Tagged ‘SIGA’

Deep OTM NP Strategy – July 2011 Results

Posted by mounddweller on July 16, 2011

Fellow Traders,

Another trading month has come and gone.  Where does all the time go?  Each month seems to go by just a little bit faster than the last.  It was a good month for the Deep OTM NP Strategy.  We had a total of 43 selections meet our criteria this month, 40 finished OTM.  That gives us a success rate in excess of 93%!  Not bad considering the quality of the companies underlying our NP selections and the shakiness of the economy.  Below are a few metrics which provide further support for my conclusion that it was a good month for the Deep OTM NP Strategy.

Percentage NP Trades Finished OTM: 40 of 43 = 93.02%

Cash Secured Capital Required to Enter All 43 Trades: $274,300.00

Premiums Received (net of commissions): $5,361,40

Net Premium ROIC: 1.95%     Annualized: 26.42%

Our three losers for the month were PTIE, SIGA, and ZN.   A passive investor who failed to get out of these 3 prior to expiration would have suffered net capital losses (including commissions) of $1,851.85.  This would have reduced the overall net profit in trading this month to $3,509.55.  The net of losses ROIC would have been 1.28%.

I will be back with another post later this weekend with our new round of selections for the August – Week 4 period.

Regards,

Troy

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Deep OTM NP Strategy – March Week 2

Posted by mounddweller on March 5, 2011

Fellow Traders,

I don’t have a lot of commentary this week to accompany our weekly picks for the Deep OTM NP Strategy.  Nothing really jumps out at me as a compelling trade.  I will make a few comments about Getty Oil (GTY).  GTY is a Real Estate Investment Trust (REIT) that leases gas stations to operators.  They have over 1,000 locations primarily in the Northeast.  This past week their largest tenant, a subsidiary of the Russion oil company, Lukoil sold their interests to another company which then announced there would be a delay in the March lease payment.  Given the market doesn’t like uncertainty the stock understandably declined precipitously.  The new tenant said it would be making the lease payment on or around March 7th.  That’s Monday.  If the new tenant makes the payment on Monday and the put premium remains high it might be a good trade.  However, I’m not sold on it as a longer term investment.  This new tenant may attempt to reduce the lease rates and thus impact GTY’s ability to maintain its current dividend.

Best of luck to everyone in their trading this week.  Be careful out there.

Regards,

Troy

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Deep OTM NP Strategy – JAN Week 3

Posted by mounddweller on January 1, 2011

Fellow Investors,

HAPPY NEW YEAR!!!

Below is the list of stocks meeting our selection criteria for Week 3 of the JAN option expiration period.

While proper execution of the strategy calls for us to sell puts on each stock meeting our criteria, this isn’t always practical.   The selections this week show one reason why this is true.  Four of the 5 stocks have a premium of $0.05.  Thus, unless a substantial number of contracts are sold it is difficult to generate a reasonable amount of income net of commissions.

The MBI trade looks interesting and a reasonable bet.  I’m using ‘bet’ literally.  MBIA is not a stock I’d like to own.  It certainly has a cloud over its head.  However, from a trading perspective, it might be worth a look.  The stock popped up this week and the $10 put  looks reasonably safe.

A quick word about IMMR.  I have held this stock in my long-term investing portfolio for several years.  They are the undisputed leader in haptics technology, having been awarded 500 patents for this technology.  No real news to explain the jump in price over the last few trading days of 2010.  I wouldn’t mind owning more of this stock at $5.

One last item to note this week.  Several stocks that made our list previously this month met our criteria again this week.  Specifically, I’m referring to SIGA, VHC, ZLC, and VRGY.  Some at the same strike price while others were at different strike prices.  I eliminate them from our list because, assuming you sold puts for that stock earlier in the month, you wouldn’t want to “double up” on your risk by selling puts on the same company again later in the month. 

For those of you who didn’t sell puts on either SIGA or VHC earlier this month, you might want to to look at and consider both the $11 and $12 strike prices for one or both stocks.

Regards,

Troy

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