Fake News, Real News, take a look at CBS

As a major network we are definitely seeing more eyeballs on the news. The stock is closer to the bottom of $47.54 then the top of $61.59.  The dividend is only 1.25% that’s not much to speak of. However at it’s coming up in the next few days we may see some movement. You can get roughly 1% return in 7 days. So how’s that for upside. Remember we want just a little bit more. 

So we are buying here at $51.13 and selling the December 14,  51 call for .77.  Not a fortune but that’s .64 upside for one week. If you don’t get called away you will see a small dividend.

Our targets are designed to make just a little bit more. Nothing feels better than a profitable trade.

As always consult your advisor before investing of any kind. options are not suitable for all investors and people can and do lose money. The above is an opinion and no warranties or guarantees are given or implied. investing requires risk and each investor must due their due diligence before investing of any kind.

Can you see beyond your nose?

As we look at the volatility of this market it’s sometimes hard to see beyond today. As we know past performance is no guarantee for future performance. This being said let’s be realistic, investing requires risk be present. One of the biggest errors is entering the market when you cannot afford to and entering in an attempt to make a short term kill, time can be your best friend or worst enemy.

At optionsdojo we attempt to provide you some guidance during these volatile markets. It is with this objective in mind that we are encouraging short term in the money calls. They expire quickly and give you some downside protection. For example this morning we see the opening will be negative. As we look at NVDA we believe that long term the company is a buy. However we don’t know where the bottom will be.

We give you two plays to consider. One look at buying after you see some settling today and immediately sell an in the money call to provide yourself some downside protection and some income along the way. The second option, would be to sell a put way out of the money and see if the stock comes to you.  WE would say that 145 is a good entry spot if that occurs. Keep the expiration to the end of the week.  You won’t get a lot of premium today but you eat a large meal one bite at a time.


Listen And Learn

When I was a young man I thought I had plenty to say. As I matured I realized that listening to those who have been there can be profitable. If you’ve ever tried to hang crown molding without advice you know what I’m talking about.

At Optionsdojo our mission is to educate the investor so that you have more arrows in your quiver. Let us look at a strategy that allows those of you who have concerns that the market will decline to enter the market and limit your risk.

The strategy is stock replacement. You may not want to buy AAPL at the current price, nor AMZN, or even GILD.  However if you were to sell a PUT at 10% below the current price you would have some opportunity to make money and if a pullback occurs get the stock at a lower price. This is stock replacement. Eventually the market will have a decline, the question is when. As you hear the pundits scream the market is strong, beware that confidence in one’s decision does not equate to accuracy. Using the stock replacement strategy, if nothing else provides that you can make money by waiting or get the stock at a lower price.

Options are not suitable for all investors. We strongly encourage you to seek the advice of your professional advisor before investing of any kind. Our mention of a stock or ETF does not imply an endorsement or solicitation of that investment. Options are not for the risk adverse and people can and do lose money.

Make Money From Enthusiasm

The covered call does several things for the conservative investor. It first provides income that can be used to lower your cost basis, in addition the selling of the call provides some protection.  So as we discuss this topic look at the current market. We have seen a sharp rise in the market as so we are using the calls to maintain our profits.  The downside of  a covered call is that your upside is limited.

We have recently purchased AMZN and sold calls at the money.  We are seeing the calls generate 1% premium for the week.  Now the theme is the same, use the calls to generate income.  If you can trade options in your retirement accounts that is great. By using the IRA or qualified account you avoid any taxes on the trade.

Now remember that pigs get fed and hogs get slaughtered. So don’t look to make a killing but rather play the calls close to the vest.  We are also using the stock replacement method of selling PUTS when we are going to have a position called away.

As always consult your advisor before investing of any kind. options are NOT suitable for all investors. People can and do lose money!

Back N Forth or Straight Down?

The question here is, how to take advantage of either situation. WE have discussed in previous posts the advantage of using options but the situation is such, we believe we should review it again.  As you may have noticed the market continues to try and find a direction.  It has moved up and now seems stuck at it’s new high.  We believe that you can make money in both situations. If you own the SPY, you can sell calls against your positions so that you may lower your cost basis. Our analysis says that it’s more likely the market will retreat Vs moving up to new highs.  The election is a big part of our call, as the market does not like uncertainty and as no clear winner is present, we have plenty of that.  WE have chosen to use options to try and maximize our returns.  WE can use a small amount of money to control a large number of shares. The SPY is currently selling at $218.52.  If you were to sell the $219 calls for December 30, 2016 you would collect $5.56 per share.  If you BUY the PUTS at the $219 level you’ll be paying $7.71 for share.  You need the SPY to decrease in order to make money, your breakeven point is $219 minus $7.71 or $211.29.  That is a 3.50% decline in the SPY.  For conservative investors the selling of Calls is the way to go, however the more aggressive can buy the PUTS.  The call buyers have a limited profit of the strike price plus the premium.  The PUT buyers are hoping to leverage their funds. The question for PUT buyers is how and when the move will start, and how far will it drop.  Our Sensei has bought the SPY puts and will let our members know when to get out.

Before investing of any kind, consult your financial advisor. Options are NOT suitable for all investors and people can and do lose money.

for our conservative members we are selling the Put today for 10% profits. 

The members that are still in the PUTS are now up 43.50%

Will August Be Hot Or Cold?

In terms of temperature it will be hot, however we believe the S&P 500 will be cold.  Over the last four years we’ve seen a loss of 6.26% and a gain of 3.77% in the S&P 500  for the high and low during the month of August.  We believe the volume will slow due to the Olympics and as the election gets closer we see uncertainty and the market does not like uncertainty.  Now you can play several ways.  For those of you who own the ETF SPY you can sell calls against your holdings.  For an more aggressive approach you may buy PUTS with the CALL proceeds.  You can also buy PUTS against the S&P and capitalize if the market does come down.

If you would like to be conservative on the PUT approach, you would buy a higher strike PUT and SELL a lower strike PUT to limit your exposure.  Either way, consult your advisor before investing of any kind.  WE have bought the August 26, $217 PUTS for  $2.29 per share.  Our breakeven is $214.71 per share.  This implies a 1% move downward. If you see a steep decline like 6%, that would be a price of $204 from it’s current level.  That would be a 10.71 gain or a 500% return.  BEWARE you can lose all of your premium.  WE stay abreast of the direction and can always jump ship earlier if deemed necessary. 

WE are up 17.90% on the PUTS we sold. As of 9:54 August 2nd.

Where am I ? In other words search for me!

GOOG is the number one search engine and we believe it is one of the best money makers in tech. GOOG is down $32 in five trading sessions and sometimes we like to use spreads to leverage our risks and maximize our returns. I think that many investors are thinking about BREXIT, or the possible British exit from the EU.  No matter what happens here we think Long term that GOOG is a good company to hold and sell calls against.  We are using a spread in this case, we are playing both sides.  WE are selling a CALL out of the money and BUYING a call at the money. We are buying the July 1, 690 call for $14.70 and selling the July 1 $702.50 for $8.60 this means we have a total of $6.10 invested in the call and our maximum profit is $12.50 – $6.10 or $6.40 that’s 100%+ if called away.  Our break even is $$696.40

We like to buy GOOG at a lower price and hold long term, so we are selling th $July 1, $680 PUTS for 9.60 and buying the July 1, 665 puts for $5.30.  Our breakeven here is $9.60 minus 5.30 or 4.30 to the plus, from $680 that’s 675.70. anything below that we are losing money and will own the stock.  This is a risky trade because you can be deep in the hole if GOOG collapses, as you will get put the stock at the lower price. 

As always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money.

Paddling And Going Nowhere? Get In.

We see the market struggling to go somewhere.  Here are a few 7 day ideas.  We like GOOG and seek to buy at a lower price if possible,  we are selling the May 13, 687.50 PUTS for $4.00.  This places us in the stock at $683.50.  We also like volatility and so we are selling the FCX May 13 , 10.50 Puts for .27, this is 2.50% for the week  (assuming it’s not put to us).

We continue to see action in the oil market and this is a spec play ,  we are selling the May 13 $9.50 for .25, placing us in the stock for $9.25, if not a 2.60% return for the week.

Our fourth pick for the week is one of wall streets best investment houses, GS.   We are selling the May 13, 152.50 PUTS for .60. This is a conservative play.  We hope to get the stock at this price.

What’s our 30 day portfolio doing on this down day?

As we review our positions we can report the following.  We are up on all four of the positions listed in the portfolio even though the market is down.  The tragic events of this morning in Brussels has caused some people to look at safety.  The stocks selected were LNKD (up), AAPL (up), GOOG (up), and VRX (up).   Now we used different approaches for these positions. If you sell a put and the stock goes up, then you are making money.  We sold PUTS for AAPL, LNKD, and we wrote calls against our position in VRX and GOOG.  We invest with targets in mind. WE encourage you to do the same. Keep your eyes on our posts as things can change and we harvest profits or limit losses at anytime.

The 30 Day Portfolio

As we put this portfolio together we wanted to have what we consider conservative opportunities and some aggressive plays. It is important to know your risk tolerance.   We believe that quite a bit of volatility will be present over the next 30 days and we are using that volatility to create returns for this portfolio.  Our first selection is AAPL (selling the April 29. 100 PUTS for $1.80 a share), we believe that long term AAPL is a great company and if this stock is PUT to US we are in for $98.20.   Our second and slightly more aggressive play is GOOG.  As you have seen from previous write-ups our Sensei like GOOG long term.  We are buying GOOG at the present price of $739.25 and selling the April 29, 750 calls for $20.50. If called away we are looking at $770.50 or $30.75 profit per share. Now GOOG is reporting earnings  4/28/16.   Our next pick is more speculative VRX has had all kinds of trouble and is down 70%+, so watch your play closely.  WE are buying VRX at the $29.50 range and selling the April 29, 29.50 calls for $6.00+.  We believe that long term this stock has value in excess of the current price.  Our last pick is LNKD, we are selling the April 29, 103 PUT for $2.25 per share.  This place us in the stock roughly 14% below its current price.  They do have earnings scheduled for 5/5/16. 

Keep in mind that selling puts means you have to back-up your PUT with cash or another put at a lower price, you can play it either way.  In addition you must feel comfortable owning the stock before you ever enter in to a PUT contract.  Consult your advisor before investing of any kind. Options are not suitable for all investors and people CAN and DO lose money.