Hello,
This is Karson Keith, Preston’s right hand man.
He wanted me to tell you he is sorry for being out of touch. He is
on vacation with his family and has been having a hard time getting
computer access.
Plan on a solid update tomorrow either from Preston or myself.
Thank you for your patients
Master Income Update -
Friday, 25 June 2010
Good day out there,
Me and the fam. are trying to get out the door on vacation. The
target was the morning, then noon – but now it’s going to be most of
the day.
I am sorry to check in so late.
I will be away from my normal command center – however I will be
checking in almost every single day next week. It’s my sanity of
sorts.
But look also for some other updates from my trading crew, namely
Karson while I’m away.
Things will likely be tame as the market is failing another set of
circumstances where a rally was likely. What’s new?
There’s nothing jumping out at me to want to act/react on. I’m just
content to see another weekend slip by here on the timeline for all
of our short term, short calls.
Anyway – I’ll be checking in on Monday!
Over and out,
–Preston
Master Income Update -
Thursday, 24 June 2010
Good morning,
I came across an exciting set-up this morning – but it’s a little
out of the ordinary (but I do have some videos on this on the MIT
site) -
It’s compelling, but different – so let me tell you about it.
As you may have heard me talk about/taught – there’s a very unique
set of stocks that are called “Mergent’s Dividend Achievers” – the
stocks on this list -as you may have guessed- all pay dividends.
But while there’s tons of stocks that pay some kind of a dividend,
the stocks on the Mergent list all have to have at least paid out
a dividend for at least 10 years.
Even further, to be on this list, they all have to have paid for at
least 10 years straight.
If you’ve made the list and miss or don’t increase the dividend
payment in any given year, you get 86′d from the list.
Now there’s some companies on there who have been on the Mergent’s
list for over 50 years.
Mergent’s also breaks down their unique dividend payers in different
categories. Like the top 20 in year to year revenue growth. The
top 20 showing the fastest rate of growth in their dividend payout,
and a million other things.
Anyway – the stock I stumbled across this morning always seems to
rank in the top 3 to 5 stocks, of all the Mergent dividend list when
it comes to the rate of dividend increases.
The stock’s a veritable bank, but it doesn’t need a bank charter. And
it’s been on the Mergent’s list for like 34 years (I don’t have my
Mergent’s book in hand at the moment).
So what’s the set-up? Only that the stock has been tanking as of late.
I love keeping my eye out for Mergent quality dividend paying stocks,
when they seem to be dashing and crashing up against the rocks on
the shore.
Several things can do this. The industry can be steadily falling out
of favor. The analyst cartel might be downgrading it. Or earnings
may be slightly missing estimates for several quarters in a row.
Whatever the case may be – the company is still being managed right,
the money pump is still primed – but the price to be an owner of the
dividend stream keeps a slippin’ – almost unnoticed.
So why do I mention a stock that’s going down?
Because there’s something unique that happens and takes over after a
while with a high quality Mergent member stock who’s falling on the
sharp pointy rocks.
That is – after a while, investors can’t stand to see the dividend
yield so high – and there’s a natural mechanism that rushes in to
support the stock.
And I figure in the kind of economy we’re likely to face for at least
a few more years – safety is always going to rush in here and there
to come for a quality dividend stream.
So enough teasing – what’s the name of this Mergent stock that’s a
skidding and a sliding?
Paychex, ticker: PAYX.
I believe they just announced earnings this morning – and the stock
is down another $.70 cents or so. But here’s the deal…the stock
sports a dividend yield of 4.5%.
And what I’m NOT saying here is that there’s any kind of set-up here
that’s traditional and like what I teach. In fact, technically, the
stock is an absolute mess.
But that’s where some longer term thinking gets exciting. If you buy
up some shares of PAYX and then set the dividends to re-invest, as
(or if) the stock drifts lower, and hell, even stays lower for 2 years,
the fat dividend is going to still be paid – and then it will re-invest
and buy more shares of PAYX…at low prices.
Add in some call selling (perhaps during months where there’s no
ex-dividend dates) – and that’s just extra cash tumbling in that you
can of course do anything with you choose. But think of the
compounding effect if you shoveled that money back in to more PAYX
shares too?
On a stock like this, and with a long-term view and perspective about
what an investment like this accomplishes over time, I wouldn’t even
bother with puts.
This would be more of a sock-it-away deal – but it has it’s own power
and reasons why.
Anyway – I hope you get the reasons here – and why I spent probably
more time than normal sketching it out.
I know this….that over 5 years, say, this PAYX thing will blow away
and leave in the dust 99% of all mutual funds out there!!
By the way, do you want to see the “lost decade” up close and personal?
Pull up a chart of PAYX of it’s entire history (on yahoo, click on “max”
to see this).
Then if you can, make it so you can light up the event of a stock split
over the chart.
During the 1990′s, you can see like 6 or 7 stock splits for PAYX, with
an increasing stock almost the entire time.
Then, check out from 2000 to 2010. Zero stock splits and a general
yawn for performance (a big, giant sideways lurch for an entire decade!)
Of course, you would be TONS richer, even during a “lost” time like
this because of the compounding effect of continually re-investing
the dividend payouts.
By the way – the PAYX thing is ideal for tax-sheltered accounts like
IRA’s, SEP’s, etc. Why? Because there’s that whole long term vibe
where you can’t touch/spend your money anyway.
Then also, almost anybody (a pulse is really all that’s required to
get approval) can sell call options/covered calls inside an IRA
structure.
Then like Ron Popeil says about his infomercial ovens…”you just
set it and forget it!” -
I’m not doing any other trade adjustments so far this morning.
Hope this finds you really well -
–Preston
P.S. Not to keep this going, but PAYX really has a unique deal as
they constantly have billions of dollars of people’s paychecks in
their bank accounts – and as paychecks are cut to hundreds of thousands
of companies, to millions and millions of people – they are always
riding “float” of some kind. Think a 100% legal skim of sorts, –P
Master Income Update -
Monday, 21 June 2010
Good morning,
From time to time I like to get an MIT trade started with a twist.
Especially if there’s a compelling edge out there.
As I fired up the computer this morning, I couldn’t help but to keep
staring at Apple.
There’s 3 major reasons for this…
1) The Nasdaq market has quietly moved up from an “E” distribution
grade to a C- …this is nearly 2 full grades without hardly a comment
or whisper about it.
2) Apple is breaking out of a box to new 52-week highs (after having
battled back and forth for several months) &
3) Apple announces earnings in July.
Given all these factors (of course the reason for it’s move is because
of new announced products like the G4 iphone, and no doubt other
products up their sleeve, which means earnings, margins, increased
forecasts, etc, etc, etc).
Anyway – this morning I am buying some AAPL July 270 calls (they are
currently $5 off the highs it already set this morning).
Now if Apple continues it’s buying and moving higher – you can just
cash in your calls for a profit – (this can make sense if the volatility
in the option pricing shoots to the moon, especially right before the
earnings announcement) -
But another tactic is to simply exercise the options, buy Apple stock
at a set price of $270, then turn around and sell calls and buy puts
against your stock when you exercise.
When there is a compelling edge of some upside – this is a way of
catching some of that upside first, before putting on an MIT.
It gets your trade off to a great headstart – and I’ve done this
from time to time to goose up my returns.
Anyway – this is what I’m doing this morning -
On a side note – I checked all my current MIT positions this morning
to make sure all calls were sold, and all puts are in place, etc.
Sometimes after an eventful expiration day, you gotta check everything
out as the dust settles from one month to the next!
Anyway – I hope this finds you well!
–P
Apple is very strong today in a rather wimply, spineless market day.
That’s nice to see.
The strongest industries (as the market attracts buyers back in) are:
retail, energy and mining.
As a side note, I uncovered a ticker: CYS. It doesn’t have options
traded on it – but just take a look at the dividend yield if you dare!
So far, the only MIT trade I’m doing is an adjustment to a current,
long-standing position. I have already adjusted 1/3 of the puts into
the November month (from August) and this morning I am doing another
1/3.
It’s on CRM.
With the stock here at $93.60 (down $1.70) – I am upping my put
protection, selling the Aug 75 puts and buying Nov 85 puts in their
place).
I now have 2/3 of my position protected at the Nov 85 puts and the
remaining 1/3 is at the Aug 80 puts.
ISRG continues to act very, very strong. Earnings are confirmed
for July 21st, after the close. ISRG looks like it wants to rally
into this date.
That’s all for right now, –P
Master Income Update #4
Here’s some more stuff I’m doing:
Rolling out my remaining half on ISRG. ISRG has really been on a
surge lately – and this one can get really excited as it rounds the
bend into its earnings announcement.
This may be what’s happening now. At any rate, I am buying back
June 340 calls (which I thought were left for dead, to expire
worthless) – and all the sudden with the stock at $347-$348, I am
buying these back and selling July 350 calls.
I am rolling out of MOS (100%) – actually – I am letting the June
45 calls expire today and I’m selling (overwriting for a day), July
45 calls.
I am extending (rolling out) on 100% of my puts on AMZN. Right now
there’s two put positions, July 130 and July 125 puts. These are
way too close time wise (we don’t want time decay working against
us like this – we want to keep our puts at least 3 months out there).
So with earnings coming up in July – and with AMZN feeling rumors
all the time about the “cloud computing” stuff – I want to stay with
this one as the volatility, rumors, etc are not soon to cease on the
likes of AMZN.
I am kicking these puts out to the October 115 puts.
I am rolling out 100% of SBUX, from the June 25 calls to the July
27 calls. (did I already say that?)
I am also rolling 100% out of BUCY June 50 calls and selling the
July 50 calls.
And on the final 1/3 of my position that needed rolling in CRM, I
am buying back June 85 calls and selling July 95 calls.
The only remaining June position I have is in MHP, the June 30 calls.
Right now, MHP is trading for $30.06 – and I’m going to watch this
heading into the close. I already have June 30 calls sold on MHP,
so these June calls are extra (over-written) and I’ll be looking to
shut these down before the close.
Anyway – I believe that’s a wrap!!
I hope you were able to get on the call yesterday with me and Dr J.
There was a lot of bitchin’ stuff that came out of him – we are
busy editing this up – so if you missed the call because of a bad
time of day, etc, look for an email shortly where you can find the
recording online!
–Preston
Master Income Update #3
I’m keeping a few things in mind as I decide how/when/what to roll
out of today.
First, while the market cycle is still DOA/missing, IBD just moved
their rating again, calling the market in a confirmed uptrend.
While these can be head-scratching – it’s at the weirdest of times
where the market can decide to rally…and they like to be this as
they count up the number of days of distribution and accumulation.
The letter grade across the board is at “E” – but I’m factoring in
perhaps a jump up in the market.
Then, however, you see a bell-weather company like FedEx come out with
a gloomier than expected earnings forecast. And you look at the lack
of jobs, and it looks/feels/smells like crappy times for the economy.
All summed up – there is plain uncertainty out there. And rolling
into the July month is a unique month as it’s a big earnings month
to boot!
So I’m trying to sell/write as “at the money” calls as I can out there.
I hope this helps for some context, etc.
Let’s get to BIDU…here’s what I’m doing on it:
Since some of my BIDU strikes for June are out of the money (namely
two June strikes of 76 and 77) – and with BIDU at $74 and change,
I am doing an overwrite here – deciding to sell some July 70 calls.
Most of what I’m rolling to are the July 75′s, so the July 70′s are
plainly for some variety. I already overwrote a few days back on BIDU,
so when these June 76 and 77 calls expire after the close today, the
position will be back to normal (a 1 to 1 ratio of calls to stock
come Monday).
On approx 10% of BIDU, I am rolling out of June 69 calls and selling
July 75 calls.
On approx 20% of BIDU, I am rolling out of June 70 calls and selling
July 75 calls.
On approx 10% of BIDU, I am rolling out of June 72 calls and selling
July 70 calls.
On approx 20% of BIDU, I am rolling out of June 71 calls and selling
July 75 calls.
Again, $1-increment strike prices don’t exist anymore on BIDU – that’s
why I’m going for mostly the $75 calls (and then some $70′s too).
That’s it for this update — I will be sending out another one
shortly!
–P
Update #2
I am doing a ton on BIDU today. Rolling out to July.
But first, let me pepper you with the other stuff so far…
I am selling calls on BP. I originally sold the June 42.50 calls and
I am going to let them expire worthless. I have already sold July
32 calls – and this morning I am selling July 33 calls.
Basically when the dust settles over the weekend, the June’s will be
out – and the new call position will be half July 32 and half July 33.
I am not touching the puts yet (100% puts are at Oct 39′s, BP trades
here at: $31 and change.
Now, the BP dividend can fall apart, the stock can fall apart – and
we’re slightly ahead on the trade forever and ever, no matter what!
And the more this stays a political football, the more hearings, the
more nightly news covering it – the stock will remain volatile as
anything. Sad but true.
I am also rolling out the June 195 calls I did on AZO. Did you get
over to see the video on this trade yet? It’s under the webinar
tab in the members area of MasterIncomeTrader.com
Anyway – I am buying back the June 195 calls and selling July
200 calls. AZO is making a new 52-week high today. This trade
has started off well. The June 185 puts that were sold for a credit
will expire worthless today with AZO trading north of $196.
(by the way, you DO NOT want to get called out of a short call when
you own LEAPS that are “covering” you. If this ever happens to you,
you need to get on the horn with a live human being at your brokerage
and do what’s called a “same day substitution” which will leave your
LEAP position alone – the last thing you want to do is cough up all
that time premium you bought in the LEAP -as it’s convereted into
stock to deliver the shares off to someone else. The same day
substitution thing is where your broker goes in, buys the stock,
delivers the stock, and leaving your LEAP alone! Of course they
make money on the commissions, but big deal!)
I will send this one off – then cover the BIDU stuff in the very
next update.
–P
Master Income Update -
Friday, 18 June 2010
Good morning,
I’m going to be firing off several updates your way – I simply have
a ton of trading to do today.
And right off the bat – most of the orders I am putting in (limit
orders) are not biting. That’s a sign that I’ll probably be here
behind this screen (looking out over a very beautiful day out there)
for most of the day!
Anyway – here is what I have just barely put in:
Buying back an overwrite position on Mastercard…the MA June 210
calls. (this isn’t a roll, just a straight order to buy calls to
close, so this one filled)
I am doing a 100% roll-out on SBUX – buying back the June 25 calls
and selling July 27 calls. SBUX has been on a nice little climb
lately (like a lot of other stocks). No bite on my limit yet.
I am doing a 100% roll-out on VPRT, buying back June 47.50 calls and
looking to sell July 50 calls (no bit yet on limit).
I am rolling 1/3 of my CRM puts out, selling Aug 70 puts and buying
November 85 puts. CRM is at $95 and these $70 puts are really not
effective. That’s my lowest put strike price – so think of this
roll-out trade as hopping up the strike price ladder – and then out
to a longer expiration time.
I will roll up the other August puts soon, but not today.
This is update #1. Get ready for several of these today!
–P
Traders Edge Network, LLC, 8869 S 60 East, Sandy, UT 84070
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