Master Income Update -
Friday, 28 May 2010
Good morning,
I am doing a new MIT trade today, let me tell you about it.
I remember reading in one of Peter Lynch’s books (in the early ’90′s).
He was talking about all the research his Fidelity Magellan fund did
to try and uncover stocks to invest in.
But all during the boom-boom 80′s and 90′s, there was a stock going
gangbusters all along, that was right under his nose, and he only
thought about it a decade and a half later (too late).
Here he was right smack dab in the mutual fund industry, being the
hottest mutual fund manager and he neglected to look at any of the
publicly traded mutual fund companies (I think it was either Franklin
or Templeton?) -
Anyway – he could kick himself for not seeing what was so close at
hand.
That’s the way I feel about BP. Here’s a stock that’s now lost over
$26 billion in market value since the news first broke about the oil
spill.
Now it’s impossible for anyone to know the true extent of the damage,
but you could say the same thing about Phillip Morris and cigarettes
during their “court days”.
How would you like to have the full resources of the federal government,
EVERY STATE, and thousands of individual cases bearing down. I mean
the amount of lawyers buzzing around this hive, trying to each stick
an IV in the cash flow veins of “MO” is downright frightening.
Yet, not only did MO never miss a dividend payment – it raised it’s
dividend each and every year.
A quick glance at BP’s cash flows – and it’s staggering how much money
is a flowin’. To boot, the dividend is now at 7% +.
But not only all of this – but the dirty little secret is:
The government NEEDS Phillip Morris to be in business, it NEEDS BP
to be in business. Not only for the income taxes, and taxes on
dividends, but also for all the “sin” taxes it gets to layer and
slather on top of these companies!
This is what you’ll never hear in the press or even uttered!
They are pseudo partners with the government and always will be!
So what about right now?
BP stocks gets kicked around like a football. It’s radioactive.
It’s talked about every 5 minutes, making national news.
And it’s downright intriguing – and right there in front of our faces.
And it’s lighting up every single strike price, in every single
month like a Christmas tree.
The dividend talk is kind of a sidelight.
The new MIT trade I’m getting involved with is buying BP, then
selling June 42.50 calls (stock is around $43.20 right now), then
buying an equal amount of Oct 39 puts.
The premium for these calls, keep in mind, is for less than a full
month’s time.
Anyway – I’m not doing any other adjustments to current trades.
But this is a new one for today.
I hope you enjoy the extra long weekend and Memorial Day!
–Pirate
Master Income Update -
Thursday, 27 May 2010
Good morning,
There’s a buying backlash going on out there today with a few names
out with very compelling earnings.
You have to understand that when the market is violently selling off,
the last care in the world is something like earnings as people are
busy running for cover.
However, when there’s a little silver lining, all of the sudden earnings
results, projections, etc become the all-important.
That’s just how it is.
Tiffany (TIF) is responding well to a new forward looking projection.
And NTAP is going nuts. It averages 3 million or so shares traded
per day – and with a couple hours in, there’s already 14 million
shares traded with the stock up $6+.
Not only this, but NTAP fits the ideal set-up to a “T”. It’s just
amazing. But it would be chasing it here in my opinion to climb
aboard.
NTAP is a very compelling stock for M.I.T. purposes. But I’m content
on waiting for a day or two for some settle down to take place.
Add over the fact this market can get schizo at any moment (this big,
strong day can look like a flash in the pan) – and we’ll likely have
some sell-off in the likes of NTAP.
It’s just too perfect of a day for it!
Anyway – there’s a robust move taking place in BIDU (when you figure
this move would be magnified by a factor of 10 pre-split, it almost
takes your breath away!) – as well as others.
I am rolling down half of my put position on MA. I have half already
at the in-the-money Oct 240 puts. I am rolling the other half from
the July 230 puts to the Oct 195 puts.
This effectively makes the put protection become half way inbetween
these 2 strikes…like around $217. MA is close to $209 at the moment.
That’s what I got for today.
–P
Master Income Update -
Wednesday, 26 May 2010
Good afternoon,
If there’s one stock out there shining the light on what the real
economic picture is, it’s Autozone (AZO) of all things!
A stock trades the way it does based on the future perceptions of
earnings and money flowing to it.
And on one of those crappy, sell-off days (yesterday in particular),
AZO just motored on up there by $8 or $9 bucks.
Does AZO look over-extended? Kinda sorta. It has gone sideways, or
paused, until it broke out yesterday. But it wasn’t a long pause,
meaning it didn’t get me any of the usual set-ups (and rules that I
follow) for a normal entry.
But I still do find AZO extremly intriguing. And I’m doing an income
trade on it – but just not in the usual way I do things.
In fact, since it’s pretty involved and a picture (actually a video)
is worth a thousand words. I am right now working on a video to
show you exactly what I’m doing.
Don’t worry – this isn’t something you have to hurry and do in the
next two minutes!
So stay tuned for the posting of that AZO video to the MIT site.
I’m not doing any trades to the existing ones that I have, fyi.
Okay – over and out!
–Preston
Master Income Update -
Tuesday, 25 May 2010
Good morning,
If you’re having a bad day for some reason – I bet you wouldn’t want
to switch places with this CEO.
No matter what pay package existed.
Don’t worry, this all has a very relevant point, because it straight-
way leads into a compelling trade set-up to consider.
The CEO of Arkansas Best Corporation has 3 huge strike against him,
and then one extra for good measure.
First of all, Arkansas Best is a trucking/freight company. They
specialize in “LTL” – which is short for Less Than Truckload.
It doesn’t mean their trucks are less than truckload size, it means
they haul freight around, and combine this freight and that freight
that’s less than a full truckload in size as the freight snakes it’s
way from station to station all across the land.
Anyway – ABFS is a trucking company.
Here are the strikes against you as CEO:
Strike One: With the country in a lingering recession, the freight
loads are a shadow compared to normal times.
Strike Two: One of your biggest costs, fuel, is rising.
&
Strike Three: You have to deal with strong-arming unions and their
bosses.
(the 4th strike, just for good measure, is being a CEO today is kinda
like being one of those duckies in a shooting gallery!)
Anyway either earnings news and/or a combination of the latest
unions contracts is making ABFS sell-off in a BIG WAY today. As I
uncover this, the stock is only several pennies from marking a new
52-week low.
The stock has sold off madly during the past few months – sliding
down 50%+ — and this action today is just sinking the stock on huge
volume while it’s gapping down.
“Would the last one in the stock turn the lights out?”
Anyway – there is tons of option volume on ABFS today – a ton more
than it normally trades — the bid/ask’s are decent and of course
with all the freak out in the stock, the option premiums look juiced
up.
The time is NOT TODAY to get into ABFS. You need to revisit the
member video lesson dealing with the Sunrise/Demise set-up and exactly
how I like to get involved when everyone has seemingly decided to
throw in the collective towel.
There is big opportunity with this set-up when you do it right.
The market can’t seem to find a break – selling off like crazy again
today. I am positioned just how I want to be on our current trades…
the market can throw what it wants our way – and we’re on solid,
solid ground!
If you didn’t get the message yesterday – we’ve got a killer event
planned in the mountain resort of Park City, UT (approx 25 miles
from Salt Lake City…a 35 minute drive from the airport!) on July
23 & 24th.
I’m really looking forward to meeting you and hope you can make it!!
All the details can be found at: www.piratesburiedtreasure.com/seminar
And you can always ask Lori anything at: 801-733-4190.
Anyway – over and out for now!
–Preston
Master Income Update
Monday, 24 May 2010
Good afternoon!
I’ve got an exciting announcement and I wanted YOU, as a member of
MIT, to be the first to know about it.
After haggling with dates, schedules and deciding on a place — it’s
all been set in stone.
There won’t be another one this year…this is it!
And with all the swirling market convulsions going on, the timing
couldn’t be any better…
I’m calling it the Wealth Summit 2010, and it’s going to be a full
2-day event in the cool, mountainous resort town of Park City, Utah.
The date is July 23-24th (a Friday/Saturday).
Everyone else will be finding out about this very soon, but I wanted
you to know about it very first.
Not only will the entire 2-days be jam-packed with the latest break-
throughs and cutting-edge “sharps” for dealing with the market today,
I insisted on pricing this for almost anyone to be able to attend.
The seating/space is going to be limited, so if you want to pre-reserve
(if that’s even a word?!) with Lori, you can call her at 801-733-4190.
There is a kick-butt partner rate and also a really big-time freebie
if you snatch a spot right now.
It’s time for a change of scenery and a break in the action to both
re-charge and re-focus!
And there’s no better place to do this than in Park City.
I hope this finds you well and I hope to meet you in person there.
I’ve told Lori I’m sending this out right now, so she’s all psyched
up and ready to help you!
Over and out,
–Presotn
Master Income Update -
Monday, 24 May 2010
Good morning,
Why do I say it’s a kick-ass Monday? Because a bunch of extra calls
expired worthless on Friday. Not to mention the normal lot of calls.
Waking up today, a bunch of margin was released due to all of these
obligations (obligations to deliver stock…even though they were
very out of the money, the obligation still exists and it thus eats
at your margin) -
The point is, with May being over, and the dust settling, things look
just bitchin’ – which is the exact opposite of being trapped in
mutual funds and having to watch their value sink and sink with no
recourse whatsoever.
Okay – enough of all that – I’m doing a bunch of things this morning,
so take a look:
First of all…I had some May 70 BIDU calls that were hovering close
to the strike price – but at the end of the day, these were exercised
and I was called out of approx 15% of my BIDU position. This morning
I am selling the same number of puts (the Sept 57 puts) and as it
stands – I am happy with the amount of stock right here in BIDU.
All my puts are in September (various strike prices) and all of my
sold calls are in June (approx half out of the money, approx 1/2
in the money — so basically that equals 100% at close to the money.
The premiums on BIDU are tremendous – easily the most compelling
stock to do an MIT trade with.
Waking up today, I am able to sell brand new, fresh June calls on
100% of my AMZN position…I obliged selling AMZN June 125 calls on
it.
The stock is around $123. Earnings are over, we’re in a very volatile
market mix – so I like selling these near-the-money calls.
I am selling fresh new calls on CRM, totally 33% of my position. I
am selling the June 85 calls here.
With a ____load of shares now in GMCR (thanks to the recent 3 for 1
stock split) – I am half-ing this position. It’s now a $23-something
stock and it’s a commission hogger with the amount of shares it has
turned into. I’m not talking anything on the stock side, either…
It’s on the call and put side! Every time you roll, it’s mega
contracts now — both with the calls and puts.
So don’t take this the wrong way. GMCR is a compelling MIT stock!
But you have to make decisions like this every once in a while. What
may be funky for me to own, can be a perfect fit for someone just
wanting to get their first trade going!
Anyway – so I am selling half my stock position. I am selling GMCR
June 28.33 puts (that’s a weird strike price due to the recent stock
split) and also GMCR June 26.67 puts.
I now have 100% put protection and it’s all at the June 26.67 puts.
I will -any day- roll these out to a further month.
I am ditching out on the last bit of FSYS I have. I HATE the bid/ask
spreads in this one – and with holding July 25 puts…it’s either make
a decision to roll these out and stay with this trade – or just end
it. I’m deciding to end it.
I am also rolling out 100% of my puts on MOS. Selling the June 50
puts and buying September 40 puts.
I will very likely be climbing into some more MIT trades over the
next few days – so make sure to stay tuned!
Over and out -
–Pirate
Master Income Update -
Friday, 21 May 2010
Good morning,
What a way to close out the week that was on Wall Street.
Countries were involved (Greece/Europe), our government was involved
(the financial reform bill), and millions of investors sat there
scratching their heads!
Let me get right to what I’m doing today:
I am rolling out 100% of my SBUX…buying back the May 25 calls and
selling June 25 calls.
On BUCY I am selling fresh, new June 50 calls. I am also rolling the
puts down by selling the BUCY July 65 puts and buying BUCY Oct 40 puts.
BUCY trades today right around $50.
I am rolling out 1/3rd of my CRM trade. I already have this over-
written, but I am rolling out of the CRM May 80 calls and selling
June 80 calls.
On approx 8% of my BIDU position, I am rolling out of May 60 calls and
selling June 70 calls.
On approx 16% of my BIDU, I am rolling out of the May 64 calls and
selling June 69 calls.
On another approx 16% of BIDU, I am rolling out of the May 63 calls
and selling June 71 calls.
(I now have quite a smattering of call strikes on BIDU…$78, $77,
$76, on down to $69)
And lastly I am rolling out of MHP May 30 puts and buying November
22.50 puts in their place.
There’s also positions like AMZN where I have an over-write going
all in the month of May. Come Monday, when these all expire
worthless, I will go for some juicy looking at the money June calls,
which are fetching over $8+!!
As you may already know, when you sell more calls than you have stock
this eats at your margin – and you can only do it so much until your
broker says “no mas”.
I, like you, am ready to see this kind of week fade into oblivion.
I love the volatility of it – but on the other hand I think you can
have too much volatility. Good hell, we still are the United States
of America — I hope that never means we’re on squishy ground…I’d
rather have it solid as a rock!
Don’t get me started in that direction!
Hope you have a great weekend.
–Preston
P.S. Me and my wife are a-ok…texting eachother, etc…I got a few
worried emails there, but it’s all good (if you’re wondering what
that’s about and missed yesterday’s update – it will explain it all)
-P
Master Income Update -
Thursday, 20 May 2010
Good morning,
Me and my wife are kind of in one of those stand-off-ish fights right
now.
She’s not going to talk or text me for a good part of the day, and I
won’t either.
I guess what happened this morning needs to simmer and die down.
It’s not a marriage threatening deal. It’s one of those things where
she already knows how I’m going to act, then I act it, and she’s just
tired of that person in me that comes out…
You know…THAT “kind of thing”.
Aw hell, I don’t expect to go into the full diatribe – let’s just
blame it all on CNBC can we?
I hardly EVER have that shit on in the morning – I can’t stand it, but
I just happened to flip it on over as the last of our kids were heading
out the door to school this morning.
Then…it happened.
With the market in full melt-down, I got so mother f’ing pissed off
at something that was said that I almost threw a shoe at our big
flat screen TV (it was a big, clown-sized shoe…actually
it’s a size 11, but it belongs to my sixth grader. A kid that’s
grown so crazy this past year, that when he puts on his big shoes it
kind of looks a bit clowny – and he would HATE me saying that, so just
keep this on the down low!)
Anyway, in addition to this eruption, I then started yelling and
swearing at the TV and that’s when my wife lost it, and started
yelling back at me -
Yelling things like how I almost ALWAYS lose it when CNBC is on, that
I need to get a life, that I need to be dressed by now, how “the act”
has worn off years ago, how I need to grow up, how I need to watch
something else – and also how I should be out of the house by that
time in the morning so she can have some peace and quiet, and how if
this ever happened in the wrong social setting how embarrassed she’d
be…you know…stuff like that.
Now we’re 18 years in to our life together and it’s all mostly very
good – but she just hates episodes like this. I guess I don’t know
what it looks like either as I’m 6’2″ and 240 and I guess it can look
a little intimidating when I get “set off” like this, waving around,
almost throwing shoes at expensive TV’s and swearing, etc.
(I didn’t do this around the kids incidentally, and I also HAVE learned
the secret to staying together, and I don’t think my wife even knows.
It’s actually a 3 word secret that I’ve never told her, but it’s just
for us guys. It’s not “I love you” or anything obvious like
that. No, the 3 words are: “leave no trace”…as in…if you’re the
man…if you just leave no trace of yourself, around the house, everything
seems to be filled with rosy promise and good will. Just get out of
the way, and it all seems to work!) -
Anyway – I digress. Getting back to CNBC and what set me off – (do
I have to re-live this?)
What got my juices going was here the market’s in a freefall. And
there’s 2 yuck-yucks sitting there about ready to go to a
commercial break.
And then they pull this smarty-pants, egotistical sounding know-it-all-
ness, smuggy-ass talk – “Stay tuned, because after the break, we’re
going to tell you the best place to put your money right now – is it
gold or treasury bills? Also, what to own instead of U.S. dollars!”
AAAAGGGGGGGGHHHHHHHHH!!!!!!!
@!%!*&%$@#!!!
Gimmie an f-ing break!!!!
First of all – you’re 3 weeks late to this party! Here the market is
sliding off the side of a cliff, and we get smug know-it-alls spouting
out their stale, old predictions! As if the viewer is really going
to be able to hop into some gold or treasury bonds and then do some
kind of a “play” on the Japanese yen or the German mark??!!
When is there ANY TALK of protective put options for insurance on a
portfolio, for individual stocks???
I guess it was a combination of things…namely, it’s like the
personalities on these shows are intending their comments to their
financial peers, either there in studio, or to other haughty reporters
or honchos so they can be seen as smart and sophisticated.
So when they go to cocktail parties or other social gatherings they
can yuck it up with the other people they want to be seen with.
It’s like they are flipping the bird to the actual viewer at home!
That, plus the combination of talking about stupid-ass stuff that
doesn’t work or matter (in place of digging and finding REAL solutions
for real viewers) just sets me off almost every time I tune in.
So take your f-ing gold, treasuries and currency talk and SHOVE IT
CNBC!!!!
When I look over our accounts today – it’s because of paying heed to
the market cycle action (what’s REALLY HAPPENING IN THE REAL WORLD)
that has us:
a) fully protected on the downside so that no matter how crappy and
unpredictable the market becomes, we have our butts protected so we
don’t have to click into CNBC and wonder what currency, t-bill or
how many gold bars we need to be buying.
b) it has us writing call premiums (and even over-writing for extra
income) to bring in income. It further points us to selling at, to
in-the-money call premiums.
c) it also has us leaving some extra margin room and not trading every
damn day because of what the cycle is showing us. We don’t have to
be trading new trades all the time…it’s okay to just tend to the
current positions we have.
Anyway – I’m into this pretty darn long – but the bottom line is it’s
damn refreshing to log into a trading account, see the DOW down over
300 points, the Nasdaq down 70, etc – but see your account
UNAFFECTED because of all of the above.
Not to mention that there’s premiums to be had right around the corner
from some fresh selling into the June month!!!
And that’s why I hope to not (even casually) flick over to CNBC ever
again!! (I’m making a new pact to myself)!
I hope this finds you well today!
–Pirate
Master Income Update -
Wednesday, 19 May 2010
Good morning,
I did a little digging this morning – and have some compelling stuff
for ya this morning.
First of all, we shouldn’t be surprised that the market keeps a free-
fallin’ – this break down was in the works weeks ago.
Last week, incidentally, 77% of stocks were still above their 200 day
moving averages – as of yesterday, this was 65%…today more will
slip.
That’s still a bunch of stocks above their 200 – as the market moves
now in a down cycle – it may indeed move to the “other” extreme.
(by the way, in the shizzley market of ’08 and into ’09 – 4% of stocks
were trading above their 200 day! This would move to 5%, then 3%.
Then it would move to 6%, then 4% — it stayed this way for weeks on
end).
20% and under is considered an over-sold market BTW.
My point is – markets love to move to extremes – and then they love to
STAY THERE! Fooling with as many minds of investors as possible.
And we ain’t even close to an extreme!
All I’m saying is…”I’m just sayin’!!”
So in kicking and looking around – I see that VVUS set-up in in an
ideal set-up in this lacklustery market.
VVUS is a $12-$13 stock. It was in the $13′s yesterday (it got to
$13.68 for a high) – today it has sold off some (surprise, surprise)
it’s at $12.20.
What’s soooo compelling about VVUS is the amount of time it took
going sideways, only to just now (yesterday) break out to reach a new
high.
And it’s doing it in the middle of this firestorm of a sell-off.
Earnings are already in their pocket, announced in April. And the
stock is extremely active, and same with the options. There are
$1 strike price increments – and the June $12.50 calls (out of the
money slightly) are trading for almost a buck.
This is very compelling premium for a mover/shaker like this stock is.
One thing though…I checked on the margin requirements for this one.
And I’m not sure about your broker – but mine has upped requirements
on this one…no doubt because of it’s extra volatility.
(instead of 50% margin, it’s 80%). Of course this goes away and is
a zero concern if you are trading this one inside of an IRA, SEP or
other tax-deferred account vehicle).
VVUS is a compelling (and affordable) MIT candidate at $12 and change,
and it’s because of the recent set-up that gives us a compelling edge
on our entry here (and no earnings for 3 months, etc).
On another completely different note – BUCY is knifing through it’s
200 day m.a. (geeez, I’m talking a lot about the “200 day” today!).
If you look at BUCY, you see that it’s been flirting with this, but
today is the first day a very convincing slash is taking place.
I like this for a downside/directional trade — but I like this trade
only after the stock trades back up, then fails with that buying effort.
See, a move like this will attract a bunch of bottom fishing buyers,
looking for a deal. But if they get frustrate, ie, the stock breaks
down after their buying effort – it’s very likely there is some
compelling downside where we can make some money with a simple put
option purchase…approx 3 months out (an in-the-money put).
I’m going to keep my eye on this and I’ll let you know if I make a
trade out of it.
That’s what I have for right now. Talk to you soon,
–Preston
Master Income Update -
Tuesday, 18 May 2010
Good morning,
Another stock out there has joined the $20-something ranks – and it’s
thanks to a stock split.
That would be Green Mountain Coffee (GMCR), which trades now in the
$23′s after a 3 for 1 stock split.
The strike prices (at least for the time being) are what I like to
call “crunky”. But when things get ironed out, this one will very
likely have $1 increment strike prices.
As the premiums go…the premiums are very fine and dandy – just like
with the bulk of stocks at this point in time.
The 2 bigger stock splits out there are stocks I happen to be in.
The monster 10 for 1 in BIDU and now this 3 for 1 in GMCR. The result
is a helluva lot of shares and contracts -which I mentioned last week
is a broker’s dream as far as commissions go! (consider that with
income producing trades WITH protection on the put side – with both
being rolled out here and there – it really adds up to quite a bit).
Anyway – that’s the reason I will be paring back on my GMCR in the
coming days. Not that I don’t like the trade – it’s actually an
ideal trade, especially for smaller accounts – but I prefer higher
priced stocks which in turn means owning less shares and contracts, etc.
It’s about finding that happy medium you could say!
This morning I’m selling brand new calls on ISRG, the June 340 calls.
The stock is at $337 or so – I am content to see the May 360 calls
expire worthless (this is an “overwrite”)…
I am rolling up puts on approx 15% of my BIDU position…moving Sept
56 puts up to the Sep 64 puts. I do this, of course, by simultaneously
(via a combined order, or “roll”) selling the Sep 56 puts, then buying
the Sep 64 puts for what’s called a net debit.
I am also rolling the same amount of calls (as I did in puts), buying
back the May 63 calls (very deep in the money) and selling June 72
calls.
SINA came out with a surprise pre-announcement which is really sending
traders and investors into buying mode. The price action and volume
are very compelling this morning. A look at the _hart shows the stock
in a mess.
But then again, with all this volatility as of late – what stocks
AREN’T messes!!??
When you flip your thinking over on the income side – as long as you
have an edge to get involved with a stock…we are buying 4-6 month
out puts while selling near-term call options for income.
Getting into the second month of generating income – we get close
to being home free, with then many months of call writing (income
generation) to go!
SINA stands out this morning – fitting this formula. It’s also a
double digit stock (at $37 to be exact) to boot.
Okay – that’s what I have for right now.
Over and out,
–P
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