The First Mate Karson Keith chiming in again.
With the market down today I want to point something out. DRYS
(the stock I recently mentioned) is only down a whopping 18 cents
or so. What is my point you ask? My point is simple: this is a slow
moving, low volatility stock that usually wont move big in either
direction. This makes it very easy to make some nice income without
much headache.
I am trying to open your eyes to other income options out their
because when you have a few of these “boring” trades mixed in with
your other more exciting, volatile, high premium positions it can
really make for a nice balance.
This brings me to another stock that my good friend Lowell pointed
out to me.
GNK
This has some nice premiums on the options and has fairly low
volatility. This is a stock that seems to have a solid range it
likes to stay in, and as income traders this is really ideal for
something a bit easier to manage. I am not taking a bite out of
this right now simply because I have tied up almost all of my
capital in other trades. For what it is worth I really like the
potential with it and will most likely be putting on a position
once I free up some capital.
Please keep in mind that just because these are relatively boring
stocks does not mean they can’t make a big move someday. You always
want to have put protection in place, even if it is a 2 to 1 call
to put ratio it is still very important to protect ourselves.
Goldman Sachs (GS) took it on the chin today because they are
being put under the microscope. This makes FAZ that much more
appealing. Something to look at, especially if the market cycle
makes a turn to the downside and the financials crack.
We are not making any other adjustments.
Have a great weekend!
Karson here,
We are making some moves today.
I am going to quote Preston for most of this update.
“BIDU up $90 (yes, that’s right) $90! Because of earnings and
outlooks -
I am rolling out of a set of calls that are the furthest in the
money. These are the May 590′s and I’m rolling them into the May
700 calls. BIDU trades for $715. Crazy and wacky stuff to be
sure!!
Then there’s GMCR -
They announced earnings and forecasts this morning – the stock is
down $9 bucks, yet they also announce a 3 for 1 stock split with a
quick turnaround split date coming fast on May 18th.
The set-up action for GMCR is the pits having just broken down out
of a trend (and doing so on huge volume ala April 20th. The
company claims they’ve got all the good kind of problems (too much
growth and not being able to handle it is what they say in a
nutshell)
While my initial reaction was to roll down on the calls for GMCR
(I had written the May 95 calls and now the stock is at $77) – I
think I’m just going to watch and stare. There’s 100% puts where
both strikes are in the money -but this is the kind of stock that
can move $6 without a blink – and keep doing it day after day.
The 3 for 1 now is a wildcard – and the fact this happens so damn
quick (May 18th) is very intriguing making me not want to touch
GMCR right here!”
So there you have it. I quoted him the best I could.
That being said, the more I look at DRYS the more I like it. In
fact I will probably be adding to it after this next options
expiration using some of the gains for the month.
Happy trading!
Hello. This is the First Mate, Karson Keith again.
I have had the honor of working and trading with Preston for years
now and it has come with countless benefits. One of the not so
obvious benefits is having the opportunity to do one on one
mentoring with some of his students.
Why do I tell you this? Well because after I mentor them I get to
keep in touch with them as their success grows, and as their
success grows they get more and more confident in their trading
abilities and start finding potential trade candidates that I
otherwise would not have seen.
My former student and good friend Jeanne pointed out an excellent
income candidate to me just this morning.
DryShips (DRYS)
This is a simple income maker. What I mean by that is it has low
volatility, some decent premiums and a fairly predictable range.
You will not have to wrestle with it much because it just doesn’t
move much. I also really like it because I have made money with it
in the past and for some reason I really like trading stocks that
have yielded profits for me a few times already.
I am buying the stock where it’s at (just below $6) and selling the
May 6 calls for about .30 cents. For my puts I am going out to
September and buy the 4 and 5 strike price (split 50/50). Now keep
in mind one could also go for just the September 4′s or just the
5′s. The decision should be based on what you are comfortable with,
because when you are comfortable in a trade you will find yourself
making better decisions.
I hope this finds you well. Have a great day.
–
-Karson Keith
Karson Keith here, the Pirates right hand man.
Preston is having me fill in for a few days while he takes a little
bit of personal time. So you are stuck with me for now.
The market is down a bit today but there is a compelling
pre-announcement that is worth pointing out. The ticker symbol is
IIVI, it is making a new 52-week high on a day that everything else
seems to be headed the other way. The only thing I don’t like about
this the options. The spreads are really not what we are looking
for. So this is going to be something that I will not be trading.
It is almost always better to wait for another opportunity rather
than take one that is not ideal.
Me and Preston are not making any adjustments to current trades
today. But never fear, if we make a move you will be the first
to know.
What we want to pay attention to at this point is the market cycle.
Just because we have a day like today, where things are taking a
small hit, does not mean we need to panic and make a bunch of
adjustments. The nature of our income trades is calm and cool, we
never want to get wrapped up in the ups and downs of one day. The
second we lose are head and start making unnecessary moves we can
really become counter productive.
Something to look at if the market cycle does turn to the downside
is FAZ.
I hope this finds you well.
–
-Karson Keith
-The Pirate’s Office-
Master Income Update -
Monday, 26 April 2010
Good morning,
“Whoa Nelly” is the famous phrase by sportscaster Keith Jackson (maybe he
stole it from someone else?) -
When I take a look at the likes of Whirlpool (WHR) and Netflix (NFLX) this
morning – the action is simply crazy.
I mean Whirlpool, who makes stocks and fridges of all things to explode and
act like they have an “i-stove” or something!!?? The trajectory of the stock is
crazy not to mention WAAAAY over-extended.
NFLX is a dollar or two away from the stock trading 100% greater than it’s 200-day
moving average. This is that “darling” phase I talk about when a stock can get
ripe to short (not yet, you don’t want to mess with “the horns”! – but movement
like this starts to get harder and harder for a stock to sustain, that’s for sure).
These two moves, by the way, are being caused by earnings and outlooks for
both as we’re smack dab in the middle of earnings reporting season.
LVS is strong and sturdy here – it looks like a solid income trade for the foreseeable
future.
I’m not making any trades today.
Truth is, I’m not in the right mindset where trading is something I can focus on
100% at the time being.
When other life stuff happens, you really need to weight what kind of effect it is
having on you. You don’t want to bring it into your trading routine, etc.
Anyway – my family had some devastating health news about my mom on Friday,
and the weekend for me was hospitals and being all over the place as far as time
and schedules.
I’m trying to deal with this the best I can – but it might be that I have Karson
come on here for most of this week to keep you up to speed with our accounts
and what we’re finding compelling, etc.
I think I just need some space to deal with things – and I hope you understand.
Being with you and staying close to the front lines of what we’re doing with
income producing trades is as passionate a pursuit for me as being in the huddle
and hearing a blitz being called (where I’m doing the blitzing!)
Anyway – I hope you understand and I look forward to what more we can learn
as a family this week – and I look forward to being back here with you in due
time.
I’m thinking about a week’s time.
I hope this finds you well.
–Preston
Karson Keith here, jumping in at the helm for the Pirate today.
Dover (DOV) is making a nice move off of a pre-announcement today,
and it is doing it on some big volume, always intriguing. We have
had some nice pre-announcements lately but the question is: How do
you choose which one to trade? The answer is not always clear, but
often times if you do a little bit of homework on each opportunity
you will usually find that one will stand out to you more than
another. You would be surprised how solid your decisions can become
when you do just a little bit more digging.
GMCR is really giving us a wild ride lately. That being said, when
we got into this we knew that it would be jumping all over! This
is exactly why I love being an income trader. I have no idea what
direction GMCR is going to go next, but I do know that I will be
burning up time value as it makes its moves.
When getting into a trade, be it an income trade or a directional
trade, it helps to be comfortable with that particular stock. For
example: if you tend to get stressed out when a stock makes big
moves then stay away from high volatility stocks and consider the
less volatile opportunities. This can really make a world of
difference in your mindset, and in turn improve your trading. Many
silly mistakes are made while under stress.
The Pirate should be back next week. I hope this finds you well.
Happy trading and have a great weekend
Master Income Update -
Wednesday, 21 April 2010
Good morning,
The new pre-announcement taking the cake today is Tupperware (TUP).
While Tupperware parties are old hat and old fashioned in American
neighborhoods, they are one of the hottest trends in other parts of
the world (this is no joke!).
Plastic containers are not that exciting, but does it matter what you
or I think of anything?!
Investors are coming for shares of TUP in a big way today.
Average daily volume goes for around 700,000 shares. Already today
2.4 million have changed hands. TUP is up $5 at around $53.30.
What’s more, TUP is an ideal set-up candidate, hitting a new 52-week
high today after building a base for many, many months.
TUP doesn’t have $1 strike price increments (but then, I don’t think
any $50 priced stocks do? If so, VERY few do).
Anyway – I really like TUP as a directional trade first – then to
turn it into an income producing trade further down the line. You
do this by simply buying 4-6 month out call options first.
Oct 50 calls fit this bill rather nicely on TUP – so that’s a trade
I’m doing this morning.
Unless you’re living in a lead-lined cave, you’ve seen Apple’s results
and the reaction in the stock price. This is a good thing to see!
(how many households, like mine, contribute to this phenomenal company’s
bottom line?!!) -
That’s all I have for right now,
Over and out, –P
Master Income Update -
Tuesday, 20 April 2010
Good afternoon,
No, there wasn’t a true morning update today – you didn’t miss anything!
But there are several new pre-announcement today that beg your
attention.
Also, the “i-everything”, larger-than-life Apple announces earnings
after the close today. It’s a little hesitant in its trading right
at the moment, but so is every stock in the immediate few hours
before the numbers drop.
Good grief, this one could really come out with a n y t h i n g for
numbers – and of course not to mention the all important guidance
going forward and what these perceptions means for investors, etc
etc, etc.
I’m content to watch these fireworks and the reactions from the
sidelines thank you very much.
But take a look at these pre-announcements that are freshly making
new tracks right now in their reactions to their numbers and
projections:
EDU (basically the correspondence school system that teach Chinese
people English and other subjects). APH & ATHR are almost as compelling
too. I really like the set-up in APH as it’s very near breaking out
to a fresh new 52-week high after a textbook drawn “base”.
All of these are worthy of your undivided attention right this very
moment. I also like the $1 strike price increments for ATHR.
I don’t have any trades for my current positions so far today.
And it’s time to send this your way! Hope it finds you well…
–P
Master Income Update -
Monday, 19 April 2010
Good morning,
It’s chaos out there – and it’s not just the Goldman stuff. You know,
curiously, I wonder something.
Since Goldman’s top dogs have inter-changeable government figures
taking posts back and forth – I wonder if the big institutional
money has known something like this was heading down the track.
The reason I wonder this is because for the many weeks now where the
market has crept up and taken more ground — curiously there hasn’t
been a marked improvement in the accumulation grade for both the
Nasdaq and S&P 500.
It’s like the only home for money’s been the stock market, yet there
hasn’t been a real conviction as the money’s been attracted there
(at least not a conviction by the BIG MONEY) – it’s just an
interesting sidenote.
In Friday’s IBD (referencing Thursday’s action) – I noticed almost
1,000 new highs vs. new lows. That is crazy extreme in one direction -
which almost always spells some short term selling in the other
direction.
On top of all this chaos – earnings are still staring some of the
biggest names square in the face. So that’s how things sit as I
open the lap this morning.
I’m being forced to make some adjustments due to the wild swings in
the likes of BIDU and others.
Here’s what I’m doing:
Reducing by 75% my position in FSYS, selling stock, buying to close
the May 30 calls and selling July 25 puts.
I am selling my directional ACOM trade, selling the Aug 15 calls
(bought for $3.40, selling them at $3.90). While I really like the
action in ACOM – the market pressures out there are making it hard
to stick with a directional, bullish trade right now.
I am rolling some BIDU calls (approx 15% of my position) buying back
May 650 calls and selling May 600 calls in their place. BIDU trades
at $608, down $24 or so.
I am also adjusting 100% of my calls in ISRG, buying back the May 370
calls and selling May 360 calls in their place, ISRG trades for
right around $360 today.
That’s what I’m doing so far – I hope this finds you well -
–P
Has it been another month already? It seems like just last week was
March expiration. Time seems to fly, but it sure is a good thing
when you make your income by from burning up time value in an
option.
This is coming from Karson (Preston’s right hand man)
Preston is on a plane right now so he had me jump in an wrap up a
few trades for him. Here is what I did:
Rolled GMCR to the May 95′s.
Rolled ISRG to the May 370′s.
Rolled SBUX to May 25′s.
CRM – Rolled the rest of the April’s to the May 80′s.
Everything else has already been rolled to May at the money calls.
Short an sweet. Have a great day.
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