Master Income Update-
Wednesday, 30 September 2009
Good morning,
Nike is sure having it’s day in the sun today. I was ready to buy
the stock right after having an up-close tour of the campus a week
and a half ago when I was up in Portland/Eugene (the campus is in
Beaverton, a burb of Portland).
It was a sports highlight of a lifetime, we even ate lunch 4 tables
down from Phil Knight himself!!
Anyway – NKE has everything going for it here…double the normal
volume, a nice $4+ move – not to mention this move today clears the
stock above a bunch of congestion dating back almost a year.
The set-up here is solid.
On the option side of things – there’s all kinds of volume as you’d
expect for a company this widely recognized…however, what’s also
familiar is the lack of premium for a large, worldwide company like
this.
Does NKE fit the bill for an MIT trade? Yes. However when you make
the decision to part with some of your capital, my druthers are to
find stocks and set-ups that offer more bang for the buck.
This takes nothing away from NKE! And if there’s anyone who wants to
lean toward jumping in, it’s me!
If you want to see what I mean, punch up NKE stock (around $64.77, up
$4.60+) and then take a look at the Nov 65 calls. They are $2.30.
For 7 weeks of time – I’d like to see this number around double that.
On the other hand this is Nike – and you should see their campus
sometime!
So I’m not doing a trade on NKE – I just can’t help talking about it!
This next stock has a compelling pre-announcement and set-up going
for it. It is also priced in an area where I know it will interest
some folks.
The ticker is JBL. JBL is up 8% and almost has triple the normal
volume hitting it (in just half the trading day so far). The options
are hopping – and JBL pays out nearly a 3% dividend yield!
JBL’s earnings are also now in the rear-view mirror (they pre-announced
today as they announced results).
With the stock here at $13.20 and the Nov 12.50 calls are going for
$1.40 X $1.50. (there are no $1 strike price increments, which
would be nice). Over on the put side, the March 10’s are $.70 X
$.80 cents.
You could also go 1/2 and 1/2 on the calls selling 1/2 the Nov 12.50
calls and 1/2 the Nov 15 calls.
While the premium here is half decent (better than NKE, but not as
good as others) – the dividend yield is compelling and gives a stock
at this price more stability than some kind of start-up.
I like JBL for an MIT trade right here.
However with the full slate of MIT trades I have going, I am not
getting into it myself — the only reason being I’ve got a ton of
stuff going!
Some people still get confused when I bring up a stock, describe the
set-up fully and why it’s compelling, and then specifically name
each piece of the trade.
When I clearly state either way that I’m trading this one right now or
I’m not trading it (due to having a full slate of positions) – people
still scratch their head in confusion to this!!!
I can’t win!!
What I’m trying to do each and every day here is bring alive what
you’re studying and learning. To apply it in the real world. So
why should I stay silent if there’s something compelling out there -
just because I can’t trade it?
I think I am pretty clear on here! If I am trading it, I don’t mince
words…I will tell you in English if I’m getting in it. I will also
tell you in clear English if I’m not going to trade it.
But just because I’m not trading it – doesn’t mean it’s not a good
trade! My account positions are different from yours. You may be
waking up, dog-eared determined to get into a new MIT trade – and
if I can help point out why something is compelling and why it’s an
opportunity…that’s my favorite thing to do!
(the most favorite thing would be to go back to the Nike campus for
another day).
That’s all for now…
–P
Master Income Update/Alert
Tuesday – 29 Sept 2009
Good morning!
Back at it here -
Let’s dive and get you up to speed on a new M.I.T. trade I’m doing
today.
The ticker is: RS
Why this stock?
Because it’s freshly pre-announced that it aims to beat the current
earnings projections. Not only that, but investors are responding to
it (with price action and volume this morning).
Further, I find the set-up compelling (it has been within pennies
of a new 52-week high this morning, after having built a base for
several months).
RS is actively traded and carries a 1% dividend yield. The options
are actively traded enough – and the premiums are compelling enough
for our purposes.
RS will be announcing earnings on Oct 22nd.
And last, but not least, is this: RS has settled back down a little
from it’s morning run (the run that usually happens during “amatuer
hour”) – I love love love avoiding that first hour! (what’s likely
to happen is with an entry right here, we’ll see RS strengthen a bit
into the close – giving us a solid entry on Day #1!)
All this action is happening on a weaker day in the market.
Here is the trade I’m building this morning (I don’t use that word
lightly -the “building” word- remember, the first month is the
construction month, very important!! If you have no clue what I’m
saying you MUST watch this video in the video module about construction
periods which can be found on the MIT website).
Anyway – here’s what I’m doing with RS:
Buying RS
Buying RS March 35 puts
Selling 1/2 Nov 40 calls & 1/2 Nov 45 calls.
With the stock around $43 – by selling 1/2 the 40 calls and 1/2 of
the 45 calls, it creates, in effect, Nov 42.50 calls…which is
where I want to be.
I love this solid call premium into November. It will take us through
earnings. Also, with commodities having been flattened (which is in
the rear-view mirror) and the world swirling with opinions, etc, there
is bound to be compelling volatility in the likes of RS.
Anyway – the numbers check out and while this November month is just
a tad bit far away (I usually like 6 weeks away or less…this is 7),
I’m going with it.
Hope this finds you well!
–P
You must be logged in to view this content.
Not currently a member? Click here.
You must be logged in to view this content.
Not currently a member? Click here.
You must be logged in to view this content.
Not currently a member? Click here.
Master Income Alert/Update:
Monday, 28 Sept -2009
Good morning,
Let me tell you the big thing I am doing today before any more of the
day passes!
It’s on Green Mountain Coffee (GMCR).
Like I was just telling my trading crew, there is a very compelling
opportunity here. And there’s an exisiting MIT trade going on it
(that needs some attention) and there’s also another trade to do
with GMCR.
First of all, the market action out there is taking most stocks with
it today. There’s no surprise there.
After having a faltering week – it is making a statement today that
probably the uptrend is still in place.
But then you look at the action on GMCR.
Almost double the normal volume is taking place (in 3 hours of market
trading time). The stock is up $4 and change and there is NO news.
Not only all of this, but the earnings date is also not until the
2nd week in November.
Not only all of the above, but GMCR is making a new 52-week high
after having battled through the past several months building a base.
All of this is very, very compelling and serves as our EDGE (very
important) in deciding what to do next with this MIT trade.
(by the way, I just tried reading the above and it hardly makes
sense – maybe the reason why is cause I’m all up and excited about
this).
And all of the above – means that GMCR has some compelling call
premiums which bodes extremely well for more on the MIT side of
things!!!
Here’s how I sit right now with GMCR:
2,000 shares. Stock at $73.16
Sold (cov call part)
10 Oct 60 calls
10 Oct 70 calls.
Long:
10 Jan 50 puts
10 Jan 60 puts
Here’s what I’m doing:
I am “rolling out” of the Oct 60 calls, buying them back and selling
Nov 75 calls.
I am “rolling out” of the Jan 50 puts, selling them and buying Mar
60 puts.
I am also buying 2,000 more shares of GMCR.
I am buying 20 March 55 puts.
I am selling 10 GMCR Nov 70 calls (at $8 and change)
I am selling 10 GMCR Nov 75 calls (at $5 and change)
So before I tell you how it all sits – let me make one thing perfectly
clear. I’m not telling you the actual amounts because it’s the right
amount for you to do!
And I’m also not saying you have to do these kinds of amounts or else
it doesn’t work.
I’m sharing this with you because I want to show you exactly what I’m
doing, in the trenches, in the heat of battle, etc.
Anyway – here’s what it looks like when the dust settles:
Long: 4,000 GMCR…stock @ $72.90
Sold:
10 Oct 70 calls
10 Nov 70 calls
20 Nov 75 calls
Buy:
10 Jan 60 puts
20 Mar 55 puts
10 Mar 60 puts
Even if you don’t quite follow every last most here – what I love
about GMCR is the compelling premiums here.
What’s important is you understand why this is a bullish roll-out
because of the set-up and reasons I described above. And how I roll-
out when I’m bullish like this.
That’s why half the sold calls are at Nov 75 (out of the money). And
most of these are in November because they’re 6+ weeks out, but with
really compelling premiums!
I have to run right now – but I wanted to share this main and obvious
trade with you right away!
–P
Master Income Update
Friday – 25 Sept, 2009
Hello there,
Well, at least I got the date right! Yesterday I was flat on my back getting over
a nasty head cold and sinus probs. Just call me “leaky” for short.
I’ve actually been trying to get on here all day -but it’s been one of those days
where my cool-as-the-other-side-of-the-pillow 13 yr. old had a day off from
middle school…and it’s been just me and him around here…very cool.
I also had stuff in the morning to do. But I wanted to fire off an update before
the weekend.
Especially because there’s some rather wild action going on out there, and some
stuff I’m doing that is not on the MIT training videos.
Let me cut right to the chase and talk about a situation like RIMM.
As you’ve heard me say, I took a side shot on RIMM with just some plain old
vanilla calls. The context of this trade was: a) I’ve been with RIMM for almost
4 months now (selling premium and making money). b) RIMM has been known
to both dazzle and awe the street with it’s numbers sending the stock flying
up the moon. And c) buying the amount of call options I did in comparison to
the current MIT income trade was really rather small.
I’ll just tell you…I have 800 shares of RIMM and I bought 2 side calls. There, now
you know.
Side Note* You may be wondering why I don’t mention the amounts of stocks/
calls/puts I do on here. The glaring, 99% reason is because what’s appropriate
for my situation doesn’t mean it’s appropriate for YOUR situation. That’s it in
a nutshell. You need to do the sizing for your situation!
Anyway – as you probably know by now today, RIMM’s guidance came in poor.
And the stock is feeling it.
Obviously those RIMM Oct 80 calls have just flattened down to nothing. But again,
this is in the context that this was a very small transaction and that this trade
has been going on over on the income side for 4 months.
The calls just didn’t work – which leads me to what I’m doing on the MIT trade
I have going on RIMM.
Again, my cost basis is going to be different to someone who might have just
gotten into RIMM last month. But I had sold Oct 80 calls, and with the stock
around $68, these are now trading for pennies.
I say all of this to set the stage for this:
When a company plays a flat note on the keyboard like RIMM just did…and you
see the kind of volume and price action that the market is showering on it, it’s
probably not going to just rise up in price as if nothing happened next week.
Think of it has a bone being broken. If you were a sprinter and broke your leg
doing something stupid, would you go out to the track a week later with a cast
on your leg thinking you could do a 400 meter hurdle event?
No, I don’t think so!
This is the same thing as the kind of news RIMM announced after the close
last night. To boot, we have a market cycle that’s been racing and racing higher
and has gotten to extreme levels.
So what to do?
Well first of all, I own December 60 puts on RIMM. Second of all, since earnings
are now out of the bag and the market has put it’s stamp on what it thinks of it,
I am deciding to do what I call a “roll down”.
And all that is, is a buy back of my October 80 calls and then a re-sell of
lower strike-price calls.
In the case of RIMM, because of the violent reaction by the marketplace, and
because it’s due to it’s earnings power, etc – in cases like this, I will often roll
down in strike price AND go out another month in time.
So for RIMM, I am buying back the Oct. 80 calls and selling the November 70
calls! Doing this locks in almost 100% of my gains on the Oct 80 calls, then it
tumbles in a bunch of cash premium because I’m selling an extra month of time.
(by the way in my case, I originally bought RIMM at $72 and change – so all of
this premium writing for the past 4 months, including the move I’m making
today “rolling down” makes this kind of trade extremely attractive!)
With that context explained, I am also rolling down on:
SNDA: rolling from the Oct 60 calls to the Nov 50 calls
CRM: rolling 1/2 my position of calls from the Oct 60 calls to the Oct 55 calls.
MA: rolling 1/3 my position of calls from the Oct 220’s to the Oct 200 calls.
ISRG in contrast is surging up there late in the day. I have decided on a 1/3
of my ISRG position to roll UP from the Oct 230 calls to the Nov 250 calls.
Today is a glittering example of just what kind of market we have on our hands
and why the MIT method is hands down better than any kind of “buying and
selling” out there!
Stocks go up, then they get hit and they go down. But the time decay curve
keeps sitting there (as sure as death and taxes) performing…and that’s what
side we are on!!!!
If you are having a hard time seeing this – you owe it to yourself to keep grinding
at the wheel. Keep learning, keep doing examples…and if you are not trading
yet – that’s simply going to be the best way to see all this come to life!!!
There’s no new trades today. And a side note on AMED…with the stock being
down another couple bucks today – this just reinforces what I was saying
yesterday. What goes up too far too fast, is likely to retrace and take some
hard hits. So I’m not yet going to roll out of this one.
Make it a great weekend.
–P
Master Income Update:
Thursday, 24 Sept, 2009
Good morning,
A few things today…
First of all it was awesome having you attend the webinar last night!
I hope you got a lot out of it. As soon as it gets some edits done
it will be posted up in the member area in case you missed it or
want to review it.
Second – it looks like the market may be letting off some steam, maybe
actually digesting some of the still crappy economic headlines out
there.
It’s amazing how the market can put the blinders on and just run,
run, and run some more!
If you were brand new to the stock market world last week, it would
be easy to get carried away in your thinking -and begin to buy up
everything in sight, especially seeing things go up and up every
single day.
But like I’ve been saying on here for weeks – the market is getting
more and more over extended. The cycle is soooo damn important.
What does it do from here? Does is correct mildly, only to resume
the advance? Or does it turn around and start a severe correction?
No one in the world knows this – but we have to be aware where the
cycle has been – and that it’s the nature of the market to move
in cycles.
With all that said – that’s exactly why we employ put options below
our income strategy! And that’s why you’ve seen me “roll up” puts
on several positions as the stock advances.
This morning, I am rolling up to higher put strike prices in ICE,
CME and BIDU.
ICE is going from Jan 75 puts to Jan 85 puts (on 1/3 of position).
BIDU is going from Jan 320 puts to Jan 340 puts (on 1/3).
CME is going from Jan 240 puts to March 260 puts (1/2 of position).
Other happenings out there.
RIMM announces earnings after the close today. I bought a side shot
of Oct 85 calls on this one – looking to exercise these calls if RIMM
hits one out of the park tonight.
If it doesn’t, it’s a cheap way of trying to add more to my RIMM
MIT trade.
VZ doesn’t have a pre-announcement or any kind of news…I just read
something about it and the strength of it’s cashflows, etc. I notice
that VZ carries over a 6% dividend yield and the stock price is a little
knocked down in it’s little channel it’s in.
Some people love doing MIT stuff on ultra conservative (read boring)
stocks like this that pay a nice div. yield. VZ is certainly on
that fits this bill.
Don’t expect the call premiums to blow you away or anything. With
the stock at $30 (and a few pennies), the Oct 30 calls are like $.50
cents, but remember how much cash this thing sends your way via
the div. payment.
By the way, the ex-dividend date comes up right around the corner
here on Oct 7th.
I am not getting into VZ myself today – just telling you about it
right now.
Speaking of pre-announcements – there aren’t any compelling ones
out there at the moment.
Finally I did want to chime in with my thoughts on AMED. Here’s a
stock that did one fantastic rocket ride up after the huge gap down
in the stock price (because of some exec.’s deciding to bolt…which
is never a good thing).
But it qualified as an MIT set-up. Why? Because AMED pre-announced
that the numbers would still come in good, and the price action and
volume where going nuts.
But still, a stock can just motor on up and never look back.
When this happens though, the stock is more than likely TO TAKE A
BREAK! And this is what I’ve been watching for. AMED is down a
couple bucks so far today. Earnings aren’t until Oct 28th (or
there abouts).
All this said – I am going to wait a few more days to see if AMED
goes through more selling. We are already maxed out on our calls,
meaning, the Oct 35 calls are all intrinsic value right now.
This one rose like a rocket, and it’s these kinds of stocks that can
shed some pounds with profit taking.
That’s all for now.
–P
Master Income Update:
Wednesday, 23 Sept 2009
Good morning,
I’m excited for tonight and I hope you can join me where I’ll be
answering a lot of the most frequently asked questions as well as
some other fun stuff.
Here is the access info again:
The webinar company is: www.gotowebinar.com
Webinar ID: 164295746
Date: Tonight, Wed Sep 23rd
Start time: 8:00 pm Eastern (5pm Pacific, 6pm Mtn, 7pm Central)
Phone: 312-878-0222
Access Code: 658-371-688
We’ll see you tonight on this one!
As for what I’m doing today.
ICE continues to gain some steam. This one happens to be my biggest
MIT income trade right now.
With ICE nearing in on $100, this morning I am rolling out of Oct
85 calls to the Oct 100 calls. This represents about 15% of the
position.
On 1/3 of the position I am also “rolling up” on the put side. I
am simultaneously selling out of Jan 75 puts and buying Jan 85 puts
(for 2010).
I am also adding to my ISRG position (another 30% add-on). I am
buying ISRG, selling Oct 250 calls and buying ISRG Jan 220 puts.
This morning ISRG is tipping the scales at: $248 and change.
Other than these moves, I am not getting into any new MIT trades
today.
Hope this finds you well and I’ll see you tonight!
–P
Introduction to the Ultimate Leverage Point
You must be logged in to view this content.
Not currently a member? Click here.
Next Page »
