Master Income Update -
Friday, 26 February 2010
Good morning,
I’ve got a couple things for you today. So buckle up!
I noticed VIT came in with the good earnings and guidance – propping
up the stock nicely…this is always good to see.
I am rolling out with part of my CME trade…with call options that
are simply deep in the money with all the time value squeezed out of
them.
Specifically I am rolling out of the March 270 calls and I’m selling
the March 300 calls in their place. CME is around $297.
Both CME and ICE looks like they have some relief buying going on -
perhaps with the government target sites pinned on health care, they’ve
loosened slightly on the “evil” commodity trading pits, etc.
The biggest surprise I’ve come across this morning has to be Rosetta
Stone. (RST)
Now at first glance this looks confusing. They issued some guidance
going forward that doesn’t look promising on the surface. Yet, the
stock is soaring and the volume is off-the-hook crazy.
The normal doing trading volume for RST is 164,000 shares a day.
Today it’s trading 1.8 million shares with 3 hours into the trading
day. The stock? RST is up $4.60 at around $22!!
So what’s up with this?
Well RST got PUMMELED and hit every branch falling out of the ugly
tree some months ago. This is one of those stock under a year old
that came out with crappy guidance.
When this happens – it can get REAL ugly, REAL quick! (in a nutshell,
most of the stock is still owned by the investment banks that took
the company public…and if they feel any whiff like they were misled
with earnings projections, etc leading up to the IPO — they can do
a massive share dumping party)
And this is what happened with RST – and the stock has been left for
dead.
Enter today. Yes, the numbers look like they didn’t come in as
expected. But in this case – the buying reaction is probably due to
the numbers coming in better than feared.
The bottom line is this…a huge gap up and buying performance like
this (for a stock that has been left for dead) – is compelling.
This is the day for the mechanic that’s spent months tinkering on
the engine of a ’69 Ford mustang, with all those trips to junkyards
and ebay auctions for spare parts – when the engire finally starts
and revs, etc!!
Bottom line – this is a great place to get an MIT trade going!!!
The high of the day has hit just shy of $23. The option activity
is firing up today too.
Anyway – just wanted to point this one out to you. This is the shiny
glinty metal found this morning after poring over a bunch of other
stuff.
Okay – gotta run now – hope this finds you well!
–P
Master Income Update -
Thursday, 25 February 2010
Good morning,
Let me clarify the phrase it’s a “doozy” day up above.
It’s a doozy if you’re trying to buy and hold or if you’re trying to
“sell high”. Or make sense out of our government. Or technical
analysis, etc, etc, etc!!
We’ve known the market cycle tipped over weeks ago. And you take
precautions and measures just in case it gets in a full blown
correction.
We may just have that on our hands.
Salesforce.com (CRM) – posted some really amazing numbers – but all
of it got swallowed up in today. If you’re a stock…chances are, you
are in the mood to go down given the headlines today.
There are still 77% of stocks trading above their 200 day moving
averages too…so it’s not like we’re skimming the bottom out there
yet!
In this kind of market – you have to be protected in every position
with puts. If you have a struggling position, what I will do in a
market like this is sell half the stock, buy back half the calls and
keep the same number of puts.
This puts you into a defensive trade that can weather any further
storms the market decides to hurl your way.
Make sure to have your protections in place! With put protection in
the market, it’s always better to act on it – rather than be foreced
into later!
I’m not doing any trading today.
–P
Master Income Update -
Wednesday, 24 February 2010
Good morning,
With the market cycle being pinned down at the lowest grade possible,
(“E”, as I talked about a little bit yesterday) – there’s a stock
out there thumbing it’s nose at what most other stocks are doing
(“most other” stocks are going in the same direction as the market
cycle)…
The ticker is ADSK.
ADSK normally trades 3.6 million shares a day. Right now it’s trading
8.7 million shares (that’s with 3 hours of trading so far)…
ADSK is up $2.64 at $28.30.
What’s more – ADSK fits the “ideal set-up” situation I’m so dang
fond of. (an uptrend that has ceased for a while – only to have a
new spark of news send the stock to a new high (either a relative
high or a new 52-week high).
ADSK is hitting a new 52-week high this morning.
ADSK also has very actively traded options, and $1 strike price
increments all along the way where it’s traded right now.
I still would trade this one with more of a defensive bent right now.
That is to say – you want to have a full set of puts for the amount
of stock and calls you work with.
And I’d be selling the $28 calls (maybe half $28′s and half $29′s).
The drawback to a trade on ADSK? The premiums aren’t as high as
other stocks (yet, if you want to go that route…it’s premiums are
HIGHER than some stocks too…ticker: MO for example).
But it still beats the tar out of normal buy and hold investing!
On the put side, the July 24 or 25 puts are the ones to pick from.
For ADSK, earnings are out of the way for 3 months.
I’m not making any trades with my current positions today.
Hope this finds you well.
–P
Master Income Update -
Tuesday, 23 February 2010
Good morning,
What does “E” stand for? It stands for an E grade for accumulation/
distribution all across the board for the major market indices.
E stands for distribution. And that’s distribution by the big money’d
financial institutions.
The flutter up we’ve seen in the market the past several weeks – may
be just that.
Only to give way to the selling that may be in store for who knows
how long?
We need to be aware of these big, muscled-up forces out there – that
dictate the direction most stocks go.
I’m talking about the market cycle here. We don’t want to predict it
or fight it – but we want to be partners with it the best we can.
This means having full put protection on any and all income trades.
It means watching the stocks your in to see if they have broken down
and out of trends. And it means selling calls that have bigger
premiums (in to at-the-money).
Only you know the stocks/trades that you’re into. These are some
things you need to keep top of mind.
Remember – protective puts changes the game! We can work inside any
kind of market climate – our edge is two-pronged: adjusting our
trades to the market cycle, and the trade set-up itself.
With all that said – I am not doing any new trades today – and I don’t
have any need to do any trading with the existing cadre of MIT
positions I’m in.
Some days there’s just no reason to trade – and that’s what this day
is shaping up to be.
Over and out for now -
–P
Master Income Update -
Monday, 22 February 2010
Good morning,
Friday I was so cramped by the computer – it was snowing, cold and
generally miserable out there.
Today the sun’s splashed all over – it’s beautiful out there and
there’s a brand new month of option time we’re into.
There’s not much happening – other than the normal companies that
are having unusual volume due to missing/hitting earnings.
BIDU is really muscling up today. Shooting right past the $500
mark it barely hit on Friday. It’s already hit $509 (now around
$504).
It never seems to fail – when a stock gets within a few dollars
of a triple digit mile stone like this ($400, $500, $300, etc) – and
when it’s a Friday…it seems like the pros like to push it and pass
those markers.
I’ve had a ton of marginability open up due to the last month of
premium capture – so I’m looking to expand some current MIT positions.
And BIDU just fits the bill!
As you may know, a way of buying a stock is by being a put seller,
And this morning, with BIDU trading around $504 – I am selling some
BIDU March $310 puts. I’m doing this with an amount I am comfortable
with (meaning, if I were to be “put” the stock, it would be an amount
that I want to add to my position anyway. The premium here is around
$21.
In a nutshell this means if the stock were put to me at $510 – my
basis in the stock would be $510 minus the $21 – or $489.
And of course if the stock gets put to me, I will turn right around
and sell calls on the stock and buy puts beneath the stock.
We’ll just see how this one behaves.
This is all I have for today.
Over and out -
–Preston
Master Income Update – Part 2
19 Feb 2010
Let’s hit the ground running:
I’m doing some “over-writes” today in places. That’s where instead
of rolling – you just write brand new March calls and then let the
Feb’s expire worthless.
Here’s an example:
on BUCY I had written the Feb 65 calls. BUCY announced earnings
yesterday and the stock is around $62 and change. Why go to the
expense and trouble “rolling” which involves the commission to buy
back the Feb 65 calls (which still have an “ask” price of $.10) -
and then sell the March 60 calls.
Instead, I’m just selling the March 60 calls on BUCY and saving the
$.10 and the commission (come Monday they will gone from the account
anyway).
Now in most cases you will want to be around your computer for all
of the trading day to do this…else you will wake up on Monday with
some surprises!
But this is something to consider (this is going “naked” for a few
trading hours…but even still, you will need the maximum option
trading level/clearance which shouldn’t be a big deal to get if you’ve
had an account open for a while).
I’m doing the same thing on MRK. I have a Feb 39 call sold that is
now worthless…yet…I want to keep this MIT trade going. So I am
selling March 37 calls, and watching this to make sure the Feb 39
calls stay out of the money until the close.
I rolling out of VPRT Feb 55 calls, and selling March 60 calls (on
half my position…the position is now fully into March calls)
I am rolling 3/4 of my ICE…which is the remaining amount needed to
get all into March. I am rolling Feb 100 calls…some into March
100 calls, but most of it into March 105 calls.
MHP:
rolling remaining half, buying back Feb 35 calls and selling March
35 calls.
SBUX:
Rolling remaining half, buying Feb 23 calls and selling March 23
calls.
AMZN:
Rolling remaining half, buying Feb 115 calls and selling March 120
calls.
ISRG:
Rolling remaining one-third of position…buying back Feb 340 calls
and selling March 350 calls.
MOS:
Rolling two-thirds of position…buying back Feb 60 calls and selling
March 60 calls.
CRM:
Rolling one-third of remaining position:
buying back Feb 65 calls and selling March 65 calls.
VPRT:
rolling remaining half of position:
buying back Feb 55 calls and selling March 60 calls
I’m selling my last GOOG Feb 570 puts (to close).
I’m doing an “over-write” on GMCR – I am letting the Feb 85 calls
expire worthless today (GMCR is at $83.30) – and I am selling new
March 85 calls. This is on approx 65% of GMCR position.
Also on FSYS…
half my position is in Feb 30 and Feb 35 calls. With FSYS at $28 and
change – I am selling March 30 calls and letting these two Feb positions
expire worthless today.
Lastly,
Because I’m going to be a degenerate, glued-to-the-screen trader today,
I noticed that BIDU (currently at $497) – has Feb 500 calls with a
$.50 cent premium left. Because I’m watching things closely – I
decided to do basically a nake call sell (even though I own BIDU in
an MIT…this is an extra “write” or sell, over and above what I’ve
already sold) – but in a nutshell…
If BIDU stays below $500 today – this is a little extra faint ring
of the cash register. Likely – it will pay entirely for every single
roll-out commission that I’m doing today.
I think I’ve got everything covered here.
Anyway – I hope this finds you well. And I’ll see you on the other
side of the expiration.
(P.S. I will be stepping out to the post office, and to grab some
lunch – but otherwise, I will be sitting here in front of the
computer if you want to zing me an email about any other stocks.
Remember, I can’t give advice and tell you what you should do – but
I can tell you what looks good to me and give you some “guidance” in
that way)
–P
Master Income Update -
Friday, 19 February 2010
Hello!
It’s around the mid part of the trading day – and it seems like I’ve
only been sitting down for 20 minutes (morning’s gone by that fast
just sitting here on my keister) -
There’s a few tid-bits I want to say before getting into the nitty-
gritty details.
It’s about the way you want to approach rolling out. Now I’m not
talking about the mechanics of rolling out…(the best way to learn
this is just by doing some trades and learning it by experience!) -
I’m talking about how to think, decide and act with rolling out.
Basically, it requires some analysis again. You have to revist the
stock, where it’s at. Is it still in the same trend when you first
bought it? Has earnings come and gone? Is earnings in a week?
What changes have happened to the market cycle since when you first
bought in? Have monthly premiums gone down?
All of these things are going to go into the mix and help you decide
IF to rollout…and if the answer is yes…the “what” to roll out to.
At the present time – 98% of my rolls go out to the next month (in
this case March). There are times when I might sneak in an April -
but for every roll this month, I’m rolling into Marc.
While the market is staging what may be a comeback…the accumulation
distribution grade for the market right now is an “E” (for the Nasdaq
and S&P 500) – actually ALL the market indices are at an E.
This makes me want to sell at- to in-the-money call premiums (meaning,
when I rollout, I’m looking to roll to at- to in-the-money calls for
the month of March).
Then there’s stocks like ISRG that’s basically a beast. It’s not
feeling this down swerve in the market cycle – it’s unflinchingly in
an uptrend – and probably is going to jump out of the box again
come earnings time!
There’s always exception stocks out there.
Another consideration – you want to trade right TODAY – knowing that
as time goes by, and with downside protection in place…it’s going
to be a matter of time before you make money.
I say this because you don’t want to constantly compare where your
“basis” is and/or freak out becaue you’re below the waterline. Trade
right today…roll right – and chances are you’re going to fine.
Remember, this is on the market neutral side of things – it’s more a
function of time passing and the math of time decay curves working in
your favor than anything else.
Good grief I hope none of this is “toothless”!! I’m spraying out a
bunch of non-specifics here (something I personally hate!!) – but it’s
just me sitting here limited by the keyboard I guess!
Okay – since this is getting a little long – I’m going to send it off,
and at the same time, I’m going to dive into Update #2 with all the
stuff I’m doing today.
See you in a few,
–P
Master Income Update -
Thursday, 18 February 2010
Hello there,
Or is it “ahoy there”?
Whatever it is…I know it’s not morning time anymore – yet I’ve been
out there looking, straining and squinting my eyes trying to find
where the compelling premium is headed into March.
And I don’t see it!
Unless you have very specific cases (MED comes to mind as something
I mentioned on here recently) – premiums across the board make you
want to drop down and take a nap on the spot.
Call it the “text test”…
If I’m not busy texting my partner or a friend about the option
premium over here or over there – then it doesn’t pass the test.
And I ain’t texting anybody!
Of course this WILL change, it always does.
For an example, take a look at CELG. Here’s a stock in a compelling
set-up situation that I like to find. The stock is hovering right around
$60 – and if you hunt down the option quote for the March 60 calls,
you probably won’t feel like texting anyone about it either.
So much for the bellyaching -
I am doing a few roll-outs today – which means the bulk of these are
going to come tomorrow.
I’m doing a roll on approx. 1/3rd of my ISRG – rolling out from the
Feb 330 calls and into the March 340 calls. ISRG is right at $340
right now and these Feb 330 calls have hardly zilch left for time
value (this, is how it should be!)…
I am rolling out of 1/3rd of my CRM. CRM kind of woke up today (they
announce earnings in about a week) – I am rolling out of the Feb 60
calls and selling the March 70 calls.
CRM is right now around $68.
Finally I am rolling out on 1/3rd of my MOS – rolling out from the
Feb 55 calls and into the March 60 calls.
MOS is at $60.75.
That’s it for the time being.
I will see you tomorrow, –P
Master Income Update -
Wednesday, 17 February 2010
Good morning,
It’s a yawner so far today. I was so bored an hour ago, I actually
did some day trading (on the likes of BUCY and DE -two stocks that
happen to be in the news today with way above average volume).
There’s that lull in the day that happens around 60-90 minutes after
the open – and after a hot stock has settled down during “amatuer
hour” it’s fun to pick off $.20 or $.40 or $.60 on a ten contract
trade.
Good grief – I MUST be bored out of my goard (whatever the hell that
means!) -
The only thing I’ve done is roll up some remaining puts on my BIDU
MIT trade. This approximately equals 1/3 of my total puts. I just
moved them from June 390 puts to June 420 puts. BIDU is at $486.
(my puts are now at June 420, 430 and 440 – kind of a smattering…
same with my calls…March 490, 480, 470, 460, 450…ah hell, don’t
ask!)
Sometimes that’s how a trade will get to look when it’s decided to
trade all over the cockamaymee place.
I will use this update to give you a 24 hour reminder.
That’s how long the webinar will be posted online before it comes
down.
If you haven’t yet seen it, it’s around 60 minutes and it covers so
killer insights about options, and some amazing breakthroughs you
simply have to see to believe.
And to let the cat out of the bag – during this webinar, my guest
Skip Shean offers a permanent “lifetime” commission discount, and
some other surprises –
He’s arranged to make this available to our group, and the way it’s
tracked is if you enter the right code, which is revealed toward
the end of the webinar.
The information alone is well worth your time – so if you haven’t
already done so…there’s 24 hours left. Just head over to:
www.piratesburiedtreasure.com/webinars
That’s what I have for right now -
I suspect in the next two days there may be some multiple updates
because of the rolling that I get to do…not to mention any new
trades that pop along.
Over and out for now,
–Pirate
Master Income Update -
Tuesday, 16 February 2010
Good morning,
Welcome to the home stretch of February expiration.
With the market up and beaming, bright-eyed and bushy-tailed and all
that, as I look around at all my near-the-money options – the action
today (at least I figure it’s today’s action that’s to blame) has
their chests puffed up with option “time-value-fluff.”
This makes it hard to buy them back (roll) – when even as early as
tomorrow, this fluff can be sucked right out of the price.
So I’m content sitting here watching this today as far as my current
positions go.
Nothing is jumping out at me to adjust or roll right now.
On some interesting notes:
MED is having a huge volume day. This stock really wiped out -out
of it’s trend where it could seemingly do no wrong.
It seems to have found a bottom – and due to the intense volatility
of late – here’s a $21+ priced stock that serves up some truly
juicy premium.
Earnings are set for around March 11th -fyi. But on a fresh look
here, MED trades at $21.58. The March 22.50 calls quote at $1.80 X
$1.95 (a June 17.50 put is a solid way of protecting on the downside).
From time to time, I like pointing out some compelling cheaper stocks
like MED that look ideal for M.I.T.
I know there are members who like it when I slide these in every so
often.
I’ve said it before – but once you get going in this – over time you
get into your positions and there’s reasons for what you’ve gotten
into.
And at some point, it may not be ideal to keep adding a bunch of
different positions into the mix. For one, it can take more and more
time just on the monitoring end.
The point is – you have to find a balance for you and your situation.
But I don’t want to NOT comment on something that swerves in from
time to time – even though I don’t plan to trade it myself.
Call it the nature of the beast!
Anyway – so I hope this finds you well today.
Over and out for now…
–Preston
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