Master Income Update -
Tuesday, 31 August 2010
Good day,
The market looks to be fading here as we enter into the last hour of
trading.
Truth is, there’s a lot of economic data coming out this week. That
said, there’s quite a bit of data that will be coming out on Apple
come tomorrow.
Why? Because Apple will be holding it’s September press conference
tomorrow, and the rumor mill is a buzzin’. Yesterday, AAPL fought
a red tape – and today it’s about even (after being in the $244′s
earlier today).
During the month of September, for the past 5 years in a row, AAPL
has averaged a 12% move to the upside in the stock price.
Anyway – there’s likely to be some sparks as AAPL is hanging out pretty
lifeless here on the grand scheme of things (I’m talking chart wise).
(a 12% bump in the stock is close to a $30 move for the stock by the
way).
Anyway -there’s some possibilities here, especially given the new
weekly options that expire this coming Friday. If the stock starts a
movin’ – and the volume’s there, etc – we can position in with options
that expire this coming Friday (with income producing credit spreads
for example!)
So I’ll keep you in tune with how I respond this T-Rex’s unfolding
news (and more importantly, the reaction by the crowd to this new
news).
I’m staying in and not adjusting any of the current trades I have
going.
Hope this finds you well!
-P
Master Income Update -
Monday, 30 August 2010
Good morning,
A couple things to get the morning started off with.
First off – we’re staring down a 3-day holiday weekend this coming
weekend. With weekly traded options this packs even more of a punch
as the weeklies become available become available on the Thursday
prior to their normal week of time.
What this means is weekly premium can be sold this coming Thursday,
then a walloping amount of time decay can be padded in your greedy
little hands as lots of time passes where no stock market is open!
This can be done in several ways. You can over-write (or over load)
by selling call options against stock that you own, over and above
what you currently have written (that will just expire on the Friday
anyway, with your new positions taking over into the next week).
Think of this as rolling early, but without rolling! You’re just
selling a new week of time while you still have options that need to
expire!
Another way to capitalize on this 3-day weekend is with credit spreads.
A way to do these is to give yourself some conservative, out-of-the
money cushion…and looking to profit purely on the time decay.
For example if a security is at $16, selling the $15 puts and buying
the $13 puts for the spread. Doing this late on a Thursday, or early
Friday, then letting the long weekend go by – gives you both cushion
in the stock price, then a bunch of time (which works in your favor)
as the stock doesn’t trade seemingly forever.
Anyway – I wanted to give you a head’s up to that.
This morning, a big-time demise is falling into our lap. On a stock
that normally trades 700,000 shares a day (the biggest volume day of
the year being a 3 million share day) – it’s trading down almost 40%
today. And the volume in the first 2 hours? Over 14 million shares!
Whoooot?!!
I’d call that a demise day! And yes, the stock is making a new 52-week
low today.
In fact, it’s taken such a hit that for the October options, they
don’t even have strike prices available yet around where the stock
is trading!
The stock? DGIT
At last look, DGIT is trading at $16.50. With this price action and
volume – and in taking a look during the past several months of trading,
today is the final straw, the cry uncle — everyone is simply rushing
out of the gates, they don’t want any part or parcel of DGIT.
This is the classic sunrise-demise in action. And we see a lot of
these during Obamanomics. And there’s money in them!
Not now, not today. But when this kind of mass, lopsided human
behavior raises its head – we can make money on the income end.
I wanted to point out this development to you this morning.
Okay – that’s all I have for right now. Over and out!
–Pirate
Master Income Update -
Friday, 27 August 2010
Good morning (barely),
As we’re into the day here – the market started off weak – then has
covered some ground.
I am rolling my weekly 125 AMZN calls into next week’s AMZN 125 calls
(oh-la-la….when you work up the math on what these weeklies equate
to, they are really something!)
I am also rolling out of FAZ 16 calls (that expire today) and selling
FAZ 17 calls for next week’s expiration.
I am also “over writing” (which simply means I’m selling more calls
than I have in stock) on BIDU, selling next week’s BIDU 80 calls.
Why would you ever want to over-write? Because you have options that
going to expire worthless today. And instead of watching them expire,
then writing new ones come Monday…
…instead you sell the new call options today, be in over-written
status -but ONLY for ONE day! Why do it? Because that way you can
take advantage of the time decay over the weekend (especially when
this is done more on Friday morning and not Friday afternoon, fyi).
The weekend time decay can be significant (all the more so with
weekly options, because each weekend represents the option heading
into its last week of expiration…this particular weekend always
packs the most punch — yet this kind of weekend now arrives every
singe Friday.
Are you starting to get just how awesome/great/cool these weekly
options are?!
I’ve been doing some pinning trades on both AAPL and GS today too.
With the quick nature of how they move – it’s not ideal to try to
get these trades out via the MIT update (trying to update in this way).
But just hang on…everything I’ve been dumping out of my brain on the
subject of weekly options, the weekend windfalls, the pinning, etc
is almost about edited and ready.
We’ll let you know ASAP – so stay tuned!!!
I hope this finds you well today -
–P
Master Income Update -
Thursday, 26 Aug 2010
Good morning,
The “knocking on the door” thing I’m talking about is another week
winding down where options expire (now every Friday on 11 stocks, and
approx 17 other securities that are market incides and assorted ETF’s)
Yes, there’s expiration Friday on the next Friday after the normal
“expiration Friday”. And I’m going to keep bugging you about it until
you dive in and take a look.
The only articles I’ve seen about weekly options out there are surprisingly
about how nimble you can now be as an option BUYER! Whooot?!!?
Good hell – is anyone out there noticing these weekly-sized premiums?
How when you add up 4 weekly premiums vs. a single 1-month premium,
the 4 weeklies add up a doubling of a traditional 1 month premium?
About the fact that a stock can move MORE in a month vs. a week, yet
the weeklies are priced higher?
About the rapid time decay that takes place with one week left -how
you can get a sizeable decline in time over the weekend prior to
that options final week of life (and how you can do this because they
started making weeklies available on the Thursday prior to their week
of expiration as of 6 weeks ago or so!)
Not to mention how you can take advantage of institutional footprints
in the options on each Friday of expiration due to the trifecta of
rapid time decay, volatility implosion and pinning?
Aw hell – I’m already jumping into a novel here – but good hell – there’s
more opportunity right now, right here, right this minute with weekly
traded options than I’ve ever seen as a trader…being an OPTION
SELLER…let’s get that straight!
One of the things that I’m doing this morning is doing an “overwrite”
on FAS. I will have FAS weekly options expiring tomorrow…a 99%
surety because they are the 19 calls.
Yet today, I am selling brand new ‘Week 1 Sept options’ that expire
not tomorrow, but next Friday. Anyway – these just came out today.
So I’m going to nab this week (plus a few days) of premium today,
selling the 19 calls again. tomorrow, this past week’s options will
expire worthless.
Then these new 19 calls will take their place…and come this weekend,
their time value is going to drop off the face of the earth, and I
will start the week with a bitchin’ new set of calls.
Are you getting my drift!?
Not to mention tomorrow – I’m gettin ready to do more Friday trades
on the likes of AAPL (or whatever opportunities are jumping up and
down begging to be traded).
Okay – so now that I’ve filled you in there…there’s a stock out
there that seems to be thumbing it’s nose at the face of the red tape
and at all the fears that more market doom and gloom may be on the
horizon, etc.
It doesn’t have weekly options (bummer…but not a lot of stocks do
yet). But if we were in the normal options world…this one would
have me to attention…truth is…it has me at attention anyway.
It’s Redhat (RHT). And I think I already might have mentioned this
one to you already?? I’m not sure.
Anyway – the volume and price action here has this thing setting up
with the ideal set-up that I’ve taught you.
There are $1-incremented strike prices all across the board with active
option trading to boot.
There are also some strikes that have compelling buying in the options,
the talk out there is that RHT could be a buy-out target.
So while weekly traded options gives us some high octane returns,
set-ups like RHT can’t be ignored — there is a place out there to
either be a buyer of 4-6 month out, in-the-money calls on RHT to
try and get some cap gains first (then to start some MIT) – or to
outright start some MIT on it.
But I wanted to bring it to your attention here this morning.
Okay – that’s it for me…over and out for now.
–P
Preston James to me
show details 9:04 AM (47 minutes ago)
Master Income Update -
Tuesday, 24 Aug 2010
Good morning,
Were you around in 1978? If you so, do you remember where you were,
what you were doing?
I ask this because there’s a publicly traded company out there – that
since 1978, started paying a dividend AND increasing it every single
year since…all the way up ’til today.
In fact, on June 24th of this year, they held a press conference and
announced that in 2011 they would be increasing their dividend
payout yet again – making that 33 years in a row.
(being an investor in this company is like no other job in the world…
that being getting a built-in pay raise every single year without
fail…no?!)
But just this morning – some collective forces have aimed one of
those carnival-like softballs at the dunk tank target –hit it dead
center — and this stock is taking a plunge in that gross dunk tank
water.
With the stock price taking this plunge – of course the dividend
yield is being jacked up higher.
Further – this plunge today isn’t slicing the stock price through it’s
50-day moving average. No, this stock has been on a steady retreat
for months…with today’s ker-plunge taking it to a brand new 52-week
low.
And it’s doing so on massive volume. The average daily volume for
this stock hovers around 6.6 million shares. Right now, with just
over an hour of trading – the volume is north of 12 million.
Today looks like that final train wreck, the ultimate catastrophe.
The day where tens of thousands of shareholders are crying “Uncle!”
The sobering day where the final workers are leaving town and passing
the billboard that says, “will the last one leaving town please turn
out the lights.”
Have I got your attention?
Wondering which company/stock I could be talking about?
The name is Medtronic, ticker: MDT
And MDT is a Mergent’s Dividend Achiever – and the shares are hitting
the sharp coral shores today in rough seas to boot. The set-up here
is the good ‘ol Sunrise/Demise (without the sunrise yet!!)
And I wanted you to know about it and the context behind it.
To be sure…the news on MDT is NOT GOOD today…a stock behaving like
this never has good headlines behind it.
But what tends to happen in mass behavior and action like this today
is it tends to get overdone. Like Waaaay overdone.
There are several opportunities here that could fit in different
accounts and account reasons/styles.
For example in a college savings account – it could be set up where
there’s a ‘drip’ (dividend re-investment plan) where the dividends
turn around and buy more stock automatically.
Further, an automatic investment, say monthly, could be set up to
buy X amount of dollars in MDT shares on like a monthly basis.
Your angle? You’ve got tons of time on your side and you’re buying
into shares with a higher yield, anticipating that this high quality,
high yield payout will ultimately attract investors (remember, there’s
a 33-year track record here) – with the stock reversing course
eventually, etc.
Another way would be to wait for the stock to take out the high that
it sets today. Then sell puts 2-3 months out, taking in a nice
premium…and if you’re “put to” and take ownership of the stock, you
buy in at a discount, then sell call premiums on top of collecting
this higher dividend yield.
No matter how you slice it – this is what the market and some other
circumstances can do to a high-quality company and a high-quality
dividend history…it can temporarily dash it…and I wanted to
bring this to your attention this morning.
As for the market — the headlines are spouting it out there…the
word “gloom” is back and investors are nervous as hell..
That’s just our reality right now – and that’s exactly why MIT was
born. It was born out of being able to prosper and create income
during times like this…and of course to give you an added edge
as we structure income around the market cycle and individual set-ups
in the stocks.
And I’m not going anywhere — so I’m glad we found eachother!
Over and out for now…
–P
Master Income Update -
Monday, 23 August 2010
Good morning,
I’m getting the morning started by doing some trading.
I had short calls expire on both SBUX and MHP over the weekend. Both
of these stocks/companies are very decent income producers. They have
both been money makers over the months.
They both even pay out dividends (MHP is a lot bigger than SBUX as
SBUX barely started paying)
Anyway – the two reasons why I’m doing this are:
1- to free up capital to move into stocks offering weekly traded
options, and
2- to free up capital to be able to get in the way of what I’m calling
Weekend Windfalls.
The MIT concept stays the same…
wait a minute…
The MIT concept actually gets dramatically enhanced by the availability
of weekly traded options! In fact, the call side premiums -when calls
are sold every week compared to every month – nearly DOUBLES the
income.
We still protect our downside with the 4-6 month out puts too (of
course!).
The fact is, I’ve been in the basement for an entire month putting
together something brand new – something I’m calling Weekly Options
Windfall.
I’m so excited about it I’m surprised I can even spell or type worth
a damn. I’m showing trade after trade after trade -done with weekly
options- on video, in all sorts of ways.
In what’s being nicknamed “WOW” (Weekly Options Windfall), I show
in detail how every single Friday is now a Pay-Day Friday as the larger
stocks that offer weekly options have a tremendous turnover in options
due to the gargantuan institutions that trade them — and how with
rapid time decay, sudden volatility implosion, and the pinning effect,
these opportunities are lining up like ATM’s where you have a free
PIN number.
It’s uncanny. It’s off the charts cool. And it’s something brand
new that NOBODY’S TALKING ABOUT!!
Except me! I’m exploding about it as I’ve now got dozens and dozens
of new videos all done about this. They also go into great detail
about how the new weekly options reality applies to the selling
of options for income — but on a weekly basis.
I just wanted you to be the first to know about all this.
W.O.W. isn’t ready yet. We’re putting an awesome little manual
together for it, and the videos are in the editing process. But as
soon as it’s all done – I’ll tell you the good news!
And when you find out the song-and-dance price that YOU qualify for
as a current MIT member, I think you probably WILL do a dance of
some kind!!
I’ll just say that you’ll be able to cover the price many, many times
over on just a single Friday….(good gracious, do you realize how
many Friday’s are in a single year too!!??)
Okay – enough of that. But I couldn’t help myself — it is just sooo
dang bitchin’.
As for today—
I am selling my SBUX and selling SBUX Oct 23 puts to close (again, the
Aug calls expired worthless over the weekend).
I am selling my MHP and selling to close the MHP Nov 22.50 puts (the
August calls expired over the weekend too).
I am also selling CBOE. This is a trade I made smaller as it wasn’t
responding. There were also Aug 35 calls that expired over the
weekend…but I’m selling my remaining CBOE and selling to close the
CBOE Dec 22.50 puts.
I am also repositioning on AMZN. As you know, AMZN offers weekly
options. Anyway – on the put side, my put protection is moving into
that last 2 months of time area (the AMZN Oct 115 puts). So this
morning, I am rolling these out (that means I’m selling these puts
and buying new ones in one combined order).
I am buying AMZN Jan 2011 115 puts in their place.
That’s what I’m doing this morning and I hope this finds you well!!
–P
Master Income Update -
Tuesday, 17 August 2010
Good morning!
Out of the gate, with BIDU where it is, I am rolling approx 15%
of my position from Aug 75 puts to Aug 85 puts (there’s approx $1.60
in time premium for the rest of this week adjusting this trade like
so!)
With the Potash buyout news – it has the rest of the fertilizer
companies out there trading higher on big volumes. I am closing
down the remaining income trade I have going in MOS. The time
value is squeezed out of the Aug 49 calls – so I am buying these
back and selling the stock.
I am re-positioning out of stocks the rest of this week (into August
expiration) and I’m going to be putting that capital to work mostly
in stocks that offer weekly options.
LVS is getting love and option buyers coming for it – the stock is
pushing up over $30 per share. Both Aug 30 calls and Sept 30 calls
offer compelling premiums. LVS, of course, has monthly options – but
stocks like this can work and fit in all kinds of accounts out there
going for income!
I’m sizing up the likes of RIMM early in the week – and there’s some
major volumes hitting certain strike prices. I am looking forward
to doing some Friday windfall trading on more names this week (as
this is the real expiration Friday for a change!)
Over and out for now -
–P
Master Income Update -
Monday, 16 August 2010
Good morning,
There’s a few things on the plate this morning. First of all, the
education sector (the online degree sector I should say) – is getting
pummeled and then some this morning after a government agency
revealed that they think there will be higher rates of student
loan defaults going on.
This has taken down the likes of STRA, APOL and ESI (as well as
others) like crazy.
ESI (ITT Tech) is easily the name with the most stock and option
volume. And what has me intrigued here is:
This is probably a government move, ala Toyota, that ends up being
waaaaay overblown and out of context and proportion. Just consider
the source of this news, with their non-business-running, un
capitalistic asses, etc.
But it also has premiums extremely juiced out there. For instance
if you look at ESI trading here for: $55.90 – the Aug 55 calls have
crazy premium priced in. Ditto for the Sep 55 calls.
While the stock is in no-man’s-land…it still traded at $120 in April
OF THIS YEAR! If anything, getting re-trained, etc is a growing
trend, not a weaking one.
Anyway – an MIT trade could be laid out here, purchasing the stock,
buying Jan 2011 45 puts, then starting to sell these August or Sept
55 calls.
These kinds of premiums will get you pacing the floor for the
opportunity of this unique situation. Geeez, government, do we
thank you or slap you?
No weekly options on ESI, fyi.
Also – LOW’s just announced earnings – so at least that drama is out
of the way. But it has LOW hovering right around $20. The only
reason I mention this is LOW is a Mergent Dividend Achiever stock
with 47 years of dividend payouts that increase every single year.
And here’s the stock at the lower end of a range it’s been – this thing
looks like it’s supported here by buyers coming in for the div. yield,
kind of like a hidden supporting force.
Anyway – noticed just a little bit ago the Aug 20 puts fetching $.31
cents. These expire this coming Friday. This kind of trade/investment
will go at it’s own, slower pace…but it fits in certain accounts,
with certain risk/reward parameters.
Bottom line, this one is a compelling money-maker, but it’s just at
a different pace!!
If LOW were put to you at $20, you’d have a basis of $19.70, then you
turn around and sell the next month out calls – plus – collect the
dividend stream.
That’s what I have for right now. I’m excited to see August premiums
bleed off here with a fast, last-week-remaining-pace!!
–P
Master Income Update
Tuesday, 10 August 2010
Greetings,
Here’s what I’m doing today. I’m shutting down half of my Mastercard
position – for the sole reason to clear up some capital to point
toward weekly option trading (income trading).
That’s selling stock, buying back Aug 200 calls and selling Oct
240 puts. MA trades for around: $216 and change.
I am rolling out some puts on BIDU. Two positions of puts actually
that account for slighly more than half of the entire position.
I am rolling Dec 65 puts up to the Dec 74 puts.
And I am rolling Sep 64 puts up to the Dec 74 puts.
Two stocks are “demising” today — Mindray Medical (MR) and Pega
Systems (PEGA). Both of these are worth watching down the road to
see if the high set today (the high on the demise day) can get taken
out by enough buyers.
I have to run out now.. –P
Master Income Update -
Monday, 9 August 2010
Good morning,
AMED is demanding you take a look at it this morning. Recently AMED
hit the skids in breathtaking demise day.
This morning, it’s traded above that demise day level (the high of the
demise day).
Why? Well, it announced earnings and a pre-announcement. The pre-
announcement doesn’t read well…but the stock is up. Most likely,
because now at least investors know the sky isn’t falling down – and
it’s manageable. And perhaps…there was an overreaction on the way
down.
Whatever it means – the crowd is coming for AMED here. The volume is
also compelling.
When you take a look here – you notice AMED has brisk option volumes
in many strikes and months. They have $1 strike price increments.
AMED is a compelling stock for income here – with an edge that the
stock moves slightly higher over the next several months.
An income trade can be entered right here. Sept at, to the slightly
in the money puts can be sold as well. But the edge here is that
the worst is over. That many, many people sold, then it culinated
in a mass exit…leaving a vacuum here.
These set-ups have a compelling edge – and that’s why I bring it to
your attention. AMED trades here for $28.20ish. Even the August
options have compelling premium!
That’s what I have for you so far today. Over and out,
–P
P.S. No adjustments on current trades as of this morning. –P
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