Hello!
Not much action happening out there today, but that is not a bad
thing. In fact I am looking to do a credit spread with the 260 and
270 calls on AAPL that expire today, and a boring day is exactly
what I want. I am only selling it for a credit of about 22 cents,
but hey picking up a couple hundred bucks for the week isn’t
anything to be mad about right?
I may not even hold it all the way to close, instead I am
considering just letting 10 cents melt off and closing it out. This
is one of those trades you need to keep an eye on, but if you are
in front of your computer anyway then why not?
Understand this is a much more aggressive trade then our usually
income trades.
I have to admit these weekly expiring options make it seem like the
monthly expiration will never come! But you have to stay focused
even though the time may seem to be passing slower.
At the moment nothing new is really jumping out at me for a solid
income trade, though I am always on the lookout!
I am letting my 15′s expire worthless on FAZ for the week and I
will be looking to sell them again on Monday. This has really been
a nice income position for a while now. Just something to consider
for the weekly options. I may go for selling the 14′s on the call
side if I were starting a new position.
Have a great weekend!
Good day!
Karson Keith here, filling in for the Pirate.
It’s crunch time! What I mean is we are coming up on another weekly
expiration Friday and now is the time I really like to pay attention
to how certain stocks are behaving. Particularly AAPL, GOOG, and
BIDU.
Why? Because these are the stocks that you can pick up some nice
premium with a Put or Call credit spread in the last TWO days of
expiration, or even on expiration day. I am not pulling the trigger
on anything today, but it will be something to consider tomorrow.
Another weekly that has been working out nicely is FAZ. Or if you
prefer FAS also has some nice premiums.
With the weekly options now on the table it is really opening up
some exciting new opportunities. It will be interesting to see how
fast this catches on, and what it means for all of us. So far I
LOVE it! Every Friday is now payday! It really is hard to complain
about that.
Other then the weekly stuff we are not making any new moves today.
I hope this finds you well.
–
-Karson Keith
PS It was an absolute pleasure meeting those of you who attended
the seminar in Park City. I truly did enjoy being around such great
people.
Master Income Update -
Wednesday, 28 July 2010
Good morning,
Global Payments (GPN) hits a new 52-week low today..this is another
one I’ll keep an eye on for any signs of recovery (specifically if
it can trade above the high it puts in today for several days).
If it can do that, it sets up a compelling income trading opportunity.
But not today!
Yesterday, I rolled out another 15% of my most in-the-money BIDU
calls, but I rolled these out to the August 80 calls (not the September’s
like I did on the first roll-out).
LVS came out with compelling earnings and guidance, the crowd really
likes it this morning. A big reality dose like this can support an
income trade for the next few months – and up to much longer.
When a company gets the numbers out, and the crowd reacts – it takes
a bunch of built up uncertainty out of the equation is all I’m trying
to say.
This expiration cycle is a long one (and seemingly taking forever!?),
and I don’t have the need of adjusting anything. There’s still more
time where the time value part of the options can bleed away. You
don’t want to roll out too early and continue to buy back options that
have that time value that falls off the fastest (during the last 2
weeks of time for example).
Also, here on Wednesday, with Thursday and Friday rolling in here, andd
with weekly options, I was looking forward to doing some weekly
expiring trades this week, however, I’m going to be out of range
from civilization this Thurs/Fri.
You see I committed to going with the scouts clear back in May, and
I’m going with my son. So while all that’s great, you have to understand
that I’m a here-in-the-present guy.
I get hit with stuff right as the week starts, rather than having it
all down on some calendar somewhere. And I found this out Monday!
Anyway – Karson is going to be hunting down some stuff while I’m
gone and he and some of my other trading team members will share a
few things.
This one kind of snuck up on me, so sorry to tell you here the day
before!
That’s what I have for right now,
–P
Master Income Update -
Tuesday, 27 July 2010
Good morning!
Hello from smack dab in the middle of earnings season, or damn near.
I find myself surrounded by books, a Barron’s over here, the IBD over
there – and with multiple browser windows open all over the place -
and I’d rather be at no other place than right here right now, with
you and me together.
Okay, there’s 2 stocks that have risen right up there on the mercury
readings — and they both happen to be very large, very established,
dividend paying companies.
They both are out with fresh new forecasts – one has pushed up and
out of a bull/bear battle into new fresh territory…the other is
very close.
One sports very, very compelling option premiums, even for August.
The other not as much, but there is still premium there and especially
because it’s floating right there at the $40 strike price…and you’ve
heard me say it before…the best bang-for-the-buck is to be the
seller of at-the-money options.
By the way, the other stock happens to be right at the $80 strike
price (this is the juicer premium).
Okay – enough with the suspense…
The two stocks are DD and CMI…Dupont Chemical, and Cummins Engine
respectively.
CMI is the $80-ish stock that sports very, very compelling premiums
for August! CMI also has a dividend yield a little south of 2%
DD has a dividend yield near 5% (which is probably why their option
premiums aren’t as rich as CMI’s).
All we gotta know about their new earnings forecasts is that the crowd
is a swarming onto the stocks (meaning the buyers are coming for the
shares).
What’s more is CMI has already set a high for the day at: $32.34.
CMI right now trades for $79.16, up $1.31
DD’s high for the day is: $41.14. The stock right now trades at:
$40.38, up $1.39.
A way to trade either of these is to sell puts to start the trade,
either by themselves, or add another put buy to make a credit spread.
You take in premium, agreeing to buy the stock at the sold put strike
price.
If it’s put to you, you now own the stock at a bit of a discount.
In the case of DD, the August 40 puts can be sold right now for $1.06
per contract. By the way, DD has $1-incremented strike prices with
2-3 pennies per bid/ask spread for each strike. So these are very
fluid and liquid!
Anyway – back to the put selling, premium can be taken in, if the
stock is put to you, you can turn right around and sell an at-the-money
call strike, then judging on the set-up, puts can be purchased, and
basically an MIT trade can get off to a solid, profitable start from
the get-go.
But then CMI has very rich premiums here – I like both of these very
much as MIT trades!
As for current positions. I am rolling out approx 15% of my BIDU (this
is the very first roll on this one). I am doing this on the now deep-
in-the-money BIDU Aug 65 calls.
Since this position got crazy (in a good way!) due to the 10 for 1
stock split…I am going to roll this portion of my position into the
Sept 80 calls (which are right at the money right now). This is a
bit early compared to what I normally do, but since there’s a lot of
rolling to do, I’m just doing this one here for some variety I guess!
That’s what I have for ya for right now! Hope you’re having a killer
start to the day.
Over and out,
Pirate
Master Income Update -
Monday, 26 July 2010
Good morning,
Wow what a weekend – I will never be able to get enough of meeting
so many cool people in one place, face-to-face…in our world of
screens, digits, and thumbing around mindlessly staring into your
hand.
Two people made it in internationally, one from Camaroon, one from
Mexico. The rest were a scattering/smattering from around the U.S.A.
It was just awesome. And for those who made it there, it was just
great having you here as our guests in the mountains. For me, I learn
just as much as you – as we get together in a group setting like that.
I want to thank my awesome staff again for making everything top notch
and making sure everyone felt welcomed and taken care of.
I am one lucky dude when it comes right down to it.
We covered a lot of ground. We did some homework. We noticed that
the Nasdaq market had just barely completed a 2 grade move higher
from Thursday’s close (reading about it Friday morning).
We found the likes of UTEK, RVBD and NTAP (which all coincidentally
have 4 letters in their ticker symbols, ala what Nasdaq stocks have).
These 3 have compelling set-ups and edges to make moves higher.
These can be structured as income trades from the get-go, however I
with the market cycle change, and the individual set-ups which are
each compelling, my choice is to “go long” first, see if some capital
gains can be racked up first, then convert/exercise the trade later
into an MIT trade.
RVBD has earnings coming up in August (and last time they announced
in May, they really tore the street up, and the stock rocketed higher).
Karson talked about FAZ and how compelling it’s been selling weekly
premiums (calls) against the position.
I also spent quite a bit of time on Thursday/Friday expiration date
trading. How this is now evolving into a weekly possibility (for those
options that have weekly options traded on them)
(Potash (POT), Exxon (XOM) and BIDU just added weeklies this past week)
We talked about specific strategies to stick premium in our pocket from
the in-efficient way time decays, volatility implodes and the
powerver “pinning” effect that comes into play mostly in the big
names (like Apple).
I am busily putting all the latest and greatest info together on these
Thursday/Friday trades (again, it’s “expiration Friday” every Friday
now on the stocks that post weekly options…so this is something
that can be done every single week!) — I will let you know ASAP
when this is all ready to rock.
IT IS KILLER STUFF!!!
Anyway – of all places, I get to roll back up to Park City. Jon
Najarian came out here to hang out for a few days, and we’re going to
head to lunch and spend the day.
Altitude, here I come (back)!
I hope this finds you well,
–Preston
Master Income Update -
Thursday, 22 July 2010
Good morning,
The explosive buying today is extremely weird to get a handle on.
For one, it’s happening – there it is in black and white!
However, companies coming in with missed earnings and/or less than
stellar guidance are trading higher, as if there was no announcement.
Several companies down in after hours trading last night, are getting
love during today’s session.
WYNN and ISRG fit this camp.
Then there’s Netflix. Netflix announced it’s membership rolls have
swollen to over 15 million people last night.
On top of that, they announced that nearly 60% of their movie content
now delivers via “streaming” over the internet, meaning no postage or
warehousing costs against this revenue.
The result? NFLX gets pummeled on this day of buying.
??
The bottom line is it’s real hard to read into today. So I’m choosing
not to!
I have to admit it’s real hard to feel your juices a-flowin’ seeing
this kind of action right there in front of your face –
But to me the market is schizo – and likely sees a brutal retreat
to the downside in the next few days.
Being we’re smack dab in the middle of earnings season – the sheer
amount of announcements from last night and this morning is daunting
to begin to weed through.
Not to mention the weeding through process is funky because of all
the strange trading going on today! What’s real and pinned to the
stock and what’s the effect of the trading day?
What’s nice is the volatility and uncertainty priced into options
because of an earnings announcement – flies out the window and adds
up to your bottom line!
All my current positions are tight and don’t need adjusting, fyi.
–P
Master Income Update -
Wednesday, 21 July 2010
Good morning,
Man I’m jumping up and down excited about this weekend! If you’re
coming, I’m very much looking forward to meeting you, your better
half – and hanging out all day Friday and Saturday in Park City, UT!
Just have to get that off my chest first of all.
I’ve got some really killer, cutting-edge stuff I’ll be sharing with
you — especially when it comes to the weekly option world that keeps
unfolding on us.
So I very much look forward to spending time with those who are
attending.
There are several compelling pre-announcements to share with you here.
CEPH and CYT being the heaviest lifters. CEPH is off a couple bucks
from the high it set earlier today. CYT it closer to it’s daily high.
CYT has a very compelling set-up as the stock is a few pennies shy
of taking out it’s 52-week high. While CEPH’s is more of a building
mode after being shellacked for several months there.
CYT is a speciality chemical maker.
I mention these 2 because there’s a real edge in how the crowd has
reacted to their numbers and forecasts that the stock moves higher
over the next few months.
Bernanke is slated to speak I believe later in the market day – it
seems the market is a bit lackluster, but it hardly ever is on the day
Apple kills it with their earnings announcement (which is what they
did!)
Also the “FinReg” thing was signed into law today. That’s the new
slew of regulations layered on top of all the other regulations that
gives all the cheating-ass politicians cover for all the corrupt
shit they did that caused the mess in the first place.
Smile for the cameras – you have the lap dog media there with only
glowing things to say!
(did I just say all of that out loud?)
I’m not doing any trade adjustments so far, fyi.
Hope this finds you well, –P
Master Income Update -
Tuesday, 20 July 2010
Good morning,
Apple’s big announcement day comes after the close today. It’s always
interested to be a watcher of one of the most compelling companies
of a lifetime weigh in with earnings results and guidance.
This will likely set the tone for the market in general – it always
seems to!
IBM is down $5-$6 bucks here with a ton of activity happening on
the $125 strike. If IBM happens to meader around for the next few
weeks, I will look to do a pin-down trade on it come the end of
August expiration.
This is one of the biggest institutionally owned stock (still)
worldwide. Anyway – I will keep an eye on this one.
WFT pre-announces better than expected earnings this morning. The
stock is reacting very favorably by investors – in both price action
and volume on this non-stellar day of a market.
The premiums for an MIT trade here are also compelling (this has been
an MIT stock in the past).
There’s also been a general “meander” for the stock price – but WFT
with these figures (and reaction to these figures, which is MOST
important!) puts this one right back in our target sites.
At $15.57, WFT has an affordable price for almost any account and
budget. FYI here on WFT.
Tupperware (TUP) trades into no-mans-land as it is reporting accounting
errors out of it’s Russian terrority of biz. This one loves to uptrend,
but then it really loves to fall apart too!
TUP also sports a compelling dividend (which the dividend yield is
getting richer as the stock falls).
There’s really no edge on this one – only to say that while the
Tupperware party has run it’s course here in the U.S. – they are THE
SHIZZLE in most other parts of the world – Asian countries being one
of the hottest!
It may be that the Russian part of the world accounts for hardly
nothing and the stock is going on sale for an overblown reason.
But thought I’d mention this one.
That’s what I have so far today!
–Pirate
Dear MIT member,
The video of the most recent webinar has been edited, rendered and
posted up online!
It’s posted inside the MIT member area under the Webinars tab.
Remember, the entire video will be viewable as my screen was being
recorded the entire time.
(It won’t show up blank like your screen showed during the live
presentation – as I forgot to push the “show my screen” button!)
Hope you enjoy!
–Preston
Master Income Update -
Monday, 19 July 2010
Hello!
Today, so far, I’m writing a fresh batch of calls (August 35 calls)
on GIS, General Mills.
I had sold July’s initially…have already qualified for the dividend,
and I like where this stock is and how aggressive they’ve been increasing
their dividend.
The premiums aren’t priced for much of any action. GIS is a different
stock with a different pace (and a different, slower pace of investor
as most of them, I believe, are in it for the dividend income).
Safer almost always equals less premium in the options.
I’ve had some requests come in for updates on MOS and SBUX. While on
my vacation, I adjusted these two – but I’m not sure if this made it
into the updates as I was in the middle of Disney mayhem.
Anyway – here’s what I did on both:
My Mosaic (MOS) position now looks like this:
Short the Aug 40 calls with a basis of $2.78. Currently they are
going for $5.35 (the stock is at $44.15)
I own a full load of puts at the Sep 40 puts.
On Starbucks (SBUX):
I am short Aug 25 calls. Sold these for $1.29, they are currently
trading for $1.20. SBUX trades at $25.35 at the moment.
On the put side, I own an equal number of puts for each call/stock,
all at the Oct 23 puts.
Hope this finds you well today!
–P
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