Time to update some of my positions, first up Gold!
Gold
May 17, 2010 I posted the expectation of gold reaching $1300 for 2010 and it has blasted through that mark recently. If you have been in gold long enough to catch a double it is time to take some profits at these levels. Diversification is the key to long term investing so if you had 10-20% of your portfolio in gold as I have,it will have swollen to 20-40%!! Always re balance as portions of your portfolio need it. The cash raised from profit taking in gold can be used for equities if our stock market makes it's way back down to the bottom of the range it has been trading in the past year or so. Personally I am selling a little at this level to raise cash levels.
American Dairy (ADY)
If you took my August 18, 2010 research and opinion to "double down" on ADY at the $7 level then the 40% run up the stock has had the past month and a half was good for us both. I do still have ITM options $10 and $12.50 expiring this month but I can take a few shares off the table at a 28% profit to roll the options forward while we await the next ER. We do need to watch this one closely as there may be another short attack of the stock and unfounded fraud news from traders trying to make a buck as we saw with ONP. If you are ahead after this last run up just take your profits now and work on the next move.
Veolia Environment (VE)
All of the long term holdings I posted about on June 23, 2010 have had a good run since then except VE. It has been flat trading in a narrow range which is great for options selling, but as a long term holding we expect to see a little upward trend over the period. I still like VE and it will maintain a place in my long term holding portfolio, but need to up my selling of options on this one!
Orient Paper (ONP)
This one is a thorn in my side right now. Even though I have made good money on this one and believe the company to be in good standing it's recent performance has been lackluster to say the least. I have learned that thinly traded, small cap, foreign stocks can be manipulated by rouge traders rather easily so I must keep an eye on all of my holdings that fit this bill and watch the short positions to try and spot the news/trade coming.
China State Construction International Holdings Ltd (CCOHF.PK)
I haven't posted about this one, although I did give this one to a few friends in conversation. The reason for not posting this one is simple; It's a very risky, thinly traded, Chinese construction stock. Information is very difficult to get for this one as well. This post will be informational about my position and trades for those that may have bought after I mentioned to them or to show how risky these are to trade. Having accumulated 5000 shares over a period of time at an average cost of .385/share (yes it trades three decimal places at times) and seeing the stocks volume start to pick up I set a limit sell order at .70 for 1000 shares and sure enough the stock started rising the very next day going from .62 to .66 and finally .70 today and my order filled. Not sure who is accumulating the shares at the moment, but the volume and activity has increased substantially in the past two weeks so if you are holding and have a profit it may be time to cash some in.
Tuesday, October 5, 2010
Wednesday, August 18, 2010
ADY
American Dairy (ADY) has hit the skids recently so it is time to assess our position and try to see where the stock is headed. I still have a small stock position in my investment account with shares dating back as far as my original purchase in July of '08 at a cost of $7.08/share. These shares were free as the stock quadrupled I sold most in stages along the way to lock in gains and kept a small position as a trophy and to try and keep abreast of the stock with annual reports in case I begin considering a position again. This, in addition to my analysis of the stock in its current state, should help give us a good gauge on how to go forward with this one.
My most recent re-position in ADY with my options trading account has me into 100 share at a total cost of $11.35/share and an ITM put option at $12.50. With the stock breaking it's 52 week low (closing as low as $7.69) nearly everyday it's time to decide if I should "double down" or cut my losses. My original position 2 years ago committed me to the stock only about 7% lower than where we are currently at and I believed that was a great bargain at the time so let's look at what state the company is in today as compared to then.
In 2008 ADY was coming off a tough year with EPS down quite similar to what they are in now. Price to book was about 2 for the year also similar to now. Gross profit is double what it was then and I believe the total year earnings will continue to the positive side as the people owning a majority of the shares also run the company and therefore have a vested interest in see the share price recover.
If we adjust for the Milk scare that happened in China that significantly affected ADY's revenues and earnings positively they have made a nice steady increase in revenue over the years and it looks like they are setting up for that to continue. The negative earnings report this past quarter was all due to increased expense or more specifically spending on further increasing capacity, quality, and advertising. One third of the increase was basically marketing so they are obviously trying hard to build demand since they upgraded capacity in 2009. Their raw milk costs also increased due to their maintaining quality as they made big money for having high quality product when all the others had tainted milk before in the last scare.
Bottom line is I don't foresee the negative earnings to continue through the year let alone the next quarter. Estimates are -.04, but I am betting on a positive number by next quarter. I am looking to double down at this point ahead of the next Q EPS report and if it comes back positive as I expect then I will add to the position again. If it reports negative again then I might start considering an exit at that time.
My most recent re-position in ADY with my options trading account has me into 100 share at a total cost of $11.35/share and an ITM put option at $12.50. With the stock breaking it's 52 week low (closing as low as $7.69) nearly everyday it's time to decide if I should "double down" or cut my losses. My original position 2 years ago committed me to the stock only about 7% lower than where we are currently at and I believed that was a great bargain at the time so let's look at what state the company is in today as compared to then.
In 2008 ADY was coming off a tough year with EPS down quite similar to what they are in now. Price to book was about 2 for the year also similar to now. Gross profit is double what it was then and I believe the total year earnings will continue to the positive side as the people owning a majority of the shares also run the company and therefore have a vested interest in see the share price recover.
If we adjust for the Milk scare that happened in China that significantly affected ADY's revenues and earnings positively they have made a nice steady increase in revenue over the years and it looks like they are setting up for that to continue. The negative earnings report this past quarter was all due to increased expense or more specifically spending on further increasing capacity, quality, and advertising. One third of the increase was basically marketing so they are obviously trying hard to build demand since they upgraded capacity in 2009. Their raw milk costs also increased due to their maintaining quality as they made big money for having high quality product when all the others had tainted milk before in the last scare.
Bottom line is I don't foresee the negative earnings to continue through the year let alone the next quarter. Estimates are -.04, but I am betting on a positive number by next quarter. I am looking to double down at this point ahead of the next Q EPS report and if it comes back positive as I expect then I will add to the position again. If it reports negative again then I might start considering an exit at that time.
Thursday, July 15, 2010
ONP Pounded to Pulp
Another negative report, from someone with a disclosed short position, further perpetuating the fraud rumor concerning ONP was published today the the stock reacted and finished down just over 11%. This tug of war between people publishing negative stories while shorting the stock and those taking long positions and publishing counter reports is making ONP a volatile stock to own.
I have made enough trading ONP's ups and downs for the past year that remaining invested in the long and short end of ONP is still worthwhile for me as an investor. If you are in the same boat as me you should keep playing along on this one as the volatility can create huge profits for us on the way up as well as the way down. If you are not in the same position, have just started a position, or have only lost money with ONP with the huge volatility I suggest that you stay clear of this stock in all forms until the smoke clears. Investing in this one with only hope will cost you.
So with all this said if you are still on the same boat with me playing the volatility of ONP to make huge gains read on.
It has been very simple with options to keep churning money out of this one. A day like today we sell OTM puts, buy a small portion of shares and when we get a pop upwards we cover the puts, sell covered calls against the stock we bought, and OTM calls. Going forward I think we need to be a little more cautious until the fraud situation is cleared up. Since we have already made money on this one it is prudent to limit our losses on selling puts by selling small OTM spreads. We also should refrain from adding any more shares for now on the huge dips.
What if this fraud report has some truth to it? The shares will get slaughtered and return to the $2-$3 level that I started buying and selling at about a year ago.
What if the fraud report is found to be false and they report blow out numbers again? The shares will climb back to the $10-$12 level.
With this valuation in mind we are looking at 50% gain or loss potential. This stock once considered a great earnings growth play has been reduced to a pure speculative play by these reports and should be treated as such. If you have other speculative plays in your portfolio, particularly Chinese, it is time to cut the cord on one of them.
I have made enough trading ONP's ups and downs for the past year that remaining invested in the long and short end of ONP is still worthwhile for me as an investor. If you are in the same boat as me you should keep playing along on this one as the volatility can create huge profits for us on the way up as well as the way down. If you are not in the same position, have just started a position, or have only lost money with ONP with the huge volatility I suggest that you stay clear of this stock in all forms until the smoke clears. Investing in this one with only hope will cost you.
So with all this said if you are still on the same boat with me playing the volatility of ONP to make huge gains read on.
It has been very simple with options to keep churning money out of this one. A day like today we sell OTM puts, buy a small portion of shares and when we get a pop upwards we cover the puts, sell covered calls against the stock we bought, and OTM calls. Going forward I think we need to be a little more cautious until the fraud situation is cleared up. Since we have already made money on this one it is prudent to limit our losses on selling puts by selling small OTM spreads. We also should refrain from adding any more shares for now on the huge dips.
What if this fraud report has some truth to it? The shares will get slaughtered and return to the $2-$3 level that I started buying and selling at about a year ago.
What if the fraud report is found to be false and they report blow out numbers again? The shares will climb back to the $10-$12 level.
With this valuation in mind we are looking at 50% gain or loss potential. This stock once considered a great earnings growth play has been reduced to a pure speculative play by these reports and should be treated as such. If you have other speculative plays in your portfolio, particularly Chinese, it is time to cut the cord on one of them.
Sunday, July 11, 2010
ADY Buy Write
Last week presented a perfect opportunity to start building a position in ADY using the buy write strategy. On Wednesday night I placed orders for shares at $14.05, sell Jan $12.50 puts for $1.50, and sell Jan $17.50 calls for $1.20. These orders were all filled Thursday as the stock went below $14 a share, reaching a low of $13.71 around lunch time, and then recovering to above the $14.40 level by the end of the day, on huge volume buying! This buy write of ADY lowered my per share price to $11.35 per share or a 20% discount.
ADY remains a great value and should see more recovery in the stock price going forward as the market begins it climb back towards the top of it's range. The huge volume buying that helped the stock recover from the $13.70 level on Thursday is a good indication that there is some big money committed to this stock at this level.
Did anyone else start or add to their position last week?
Friday, July 2, 2010
得到了牛奶吗？ (got milk?)
American Dairy (ADY)
I mentioned this one back in February as a stock that I would like to start a position in again at around the $20 or less range. Back in 2008 when the Chinese milk scare annihilated every milk producing company in China ADY, a stock I owned at the time, quadrupled in price due to being the only major producer of milk products unaffected by the scare. It has retreated big time since then due in part to a bad quarter at the end of 2009 and even though the company has returned to it's profitable ways, and financial quarter, the stock has not.
My fellow investor and options specialist alerted me to the fact it is now below it's 52 week low and a prime candidate for selling a put spread. The only question now is do we play conservative with a 12.5/10 spread or play confident and put our money where our mouth is with a 15/12.50 spread? If you want to try and build an actual stock position than the Jan $12.5 put for $1.30 looks nice.
I mentioned this one back in February as a stock that I would like to start a position in again at around the $20 or less range. Back in 2008 when the Chinese milk scare annihilated every milk producing company in China ADY, a stock I owned at the time, quadrupled in price due to being the only major producer of milk products unaffected by the scare. It has retreated big time since then due in part to a bad quarter at the end of 2009 and even though the company has returned to it's profitable ways, and financial quarter, the stock has not.
My fellow investor and options specialist alerted me to the fact it is now below it's 52 week low and a prime candidate for selling a put spread. The only question now is do we play conservative with a 12.5/10 spread or play confident and put our money where our mouth is with a 15/12.50 spread? If you want to try and build an actual stock position than the Jan $12.5 put for $1.30 looks nice.
The Paper Airplane Soars!
ONP rebounded just as we suspected today to the tune of 43% which has to be the biggest one day percentage gain I have ever made on a single stock and produced over $1200 in gain for me! This gain was spurred by huge volume again coupled with news calling the muddy waters research a fraud. We saw this coming yesterday after reviewing the information that came from the muddy waters report, the rebuttal from ONP, and information from other analysts that have previously done research on the company. This is why we need to constantly monitor our positions on a daily basis and review our reasons for owning the stock at least weekly.
This plane still hasn't reached cruising altitude yet so don't be afraid to book your ticket to fly the second leg of the flight. ONP is still down from the point the shady fellows at muddy waters began laying their short assault on the stock which I believe to be in the $8-$8.50 range. Couple this with the other two analysts target prices of $15 and $16/share respectively and I expect it to return to the $8-$10 range again.
The orders for Tuesday:
Sell Feb 11 $10 calls for $1.15/contract
Sell Feb 11 $12.5 calls for $.70/contract
Sell more Nov $5 puts for $.70/contact
If you don't yet have a position in ONP I would consider selling the Nov $7.5 puts for $1.75
Anyone else have origami paper plays?
This plane still hasn't reached cruising altitude yet so don't be afraid to book your ticket to fly the second leg of the flight. ONP is still down from the point the shady fellows at muddy waters began laying their short assault on the stock which I believe to be in the $8-$8.50 range. Couple this with the other two analysts target prices of $15 and $16/share respectively and I expect it to return to the $8-$10 range again.
The orders for Tuesday:
Sell Feb 11 $10 calls for $1.15/contract
Sell Feb 11 $12.5 calls for $.70/contract
Sell more Nov $5 puts for $.70/contact
If you don't yet have a position in ONP I would consider selling the Nov $7.5 puts for $1.75
Anyone else have origami paper plays?
Thursday, July 1, 2010
Orient Paper Torn to Shreds!
Today Orient Paper (ONP) finished down almost 24% and was down over 30% for a period of time this morning. As you may remember I managed to book over 20% profit in this stock and also sold $12.50 calls for $1.15 per contract on my remaining shares back in April. ONP getting torn to shreds today allowed me to buy back all my $12.50 calls and $15 calls for .05 each booking $1.10 in profit for the $12.50 calls and .90 for the $15 contracts. I also sold $5 puts at $1.10 per contract. It would have been possible to get more, however I was greedy and placed a limit order at $1.50 and it didn't fill so I ended up chasing it down to $1.10.
This really shows the advantage an options seller has when investing in stocks. The shares I have remaining in ONP cost me $8.28/share at the end of March quickly went up 20+%, Which enabled me to sell a portion of shares for a quick profit, but more importantly sell OTM calls at a good premium. The $8.28/shares now are discounted by the $1.10/share I made for the $12.50 calls, .90/share made for the $15 calls and now $1.10/ share more for the $5 puts sold today. This brings my cost basis down to $5.18/share reducing my exposure to today's big plunge down to $5.09 and more importantly protecting the profit I made off of the portion of shares I sold after the 20% move up back in April!
Now for the even better stuff! The reason ONP went up in flames today was unsubstantiated claims made about the company by a couple of investors who bought heavy short positions just prior to making the claims. They preyed on a fear that most people investing in Chinese stocks area afraid of, inaccurate reporting of numbers in financial statements. You can read more about the story here . Looks to me that they succeeded and made a lot of money in doing so, but the large amount of volume as the stock started to recover from it's lows just before lunch time shows they are booking profits and the stock will recover. This will be a great opportunity for us to make even bigger profits when news that the claims made were unsubstantiated and the short positions are covered.
The Trade:
Sell the NOV $5 put for $1.00 or initiate a position at around the $5 level and wait for this paper airplane to soar!
Update: Might be too late if you didn't take advantage today! Just found this on a site posted 1hr ago, Orient Paper Inc (NYSE:ONP) shares jumped 19.65% in after hours trading on volume of 11,942 shares traded.
Anyone know how to verify the after hours pricing?
Verified by Yahoo finance:
Orient Paper, Inc. NEW Common S
(AMEX: ONP)
After Hours: 6.09 
1.00 (19.65%) 7:59PM EDT
Tuesday, June 29, 2010
Options on Down Days
With the huge stock slide today it's time to review our options basics to take advantage of these opportunities. When the market makes a big move downward like this it is prime time for selling puts for larger than normal premiums and buying back OTM calls for pennies on the dollar.
I keep a list of stocks that belong in my portfolio and use these "fire sale" days like today to try and sell puts against these securities for more money than I would have gotten otherwise. The benefits are two fold; There is a chance the stock drops more and get the stock at a huge discount or the stock rises back to normal levels and the option expires worthless and I keep the larger than normal premium.
My conservative put sale order:
VE Jan $20 for 1.05, This is one I discussed in the last post as a key long term holding that you have to own and with this sale the worst that can happen is you own the stock for $19 which is a 20% discount from todays price and would make the yield 9%!!
My risky put sale order:
RINO Dec $7.50 for .85, Owning this stock for $6.70 would be great, but be careful what you wish for with these highly volitile Chinese stocks. If you don't have a fun, high risk/high reward, speculative stock this one is worth playing.
If you sold calls 500-700 dow points ago like I did then instead of waiting for them to expire you could buy them back and book the income now. This will help you put more of your buying power to work selling more options for more premiums. If you sold a call that expires more than a month or two in the future and you can buy it back for 10% or less of the premium you paid the prudent move is to do so.
My call closing order:
ONP Nov $15 at .05, This has been a good premium provider and was discussed in a previous post. Trying to close it out after selling for .95 premium leaving me a $90 per contract profit.
Wednesday, June 23, 2010
Long Term Holdings
Most of my posts revolve around short term trades and option plays, but now I am going to give you my long term holdings. Long term holdings are stocks I have held or plan to hold for one year or more to capture profits from long term growth trends, dividend yield, or both. Having a long term holdings portfolio in addition to a trading portfolio and options portfolio is as key to diversification as spreading your investment in different sectors of the market. The following is a list of my favorites.
Note: A majority of my long term holdings are now becoming option plays as well through selling covered calls against the stock which is the safest way to profit from options.
Provident Energy Trust: (PVX) This is a steady income machine with an almost 10% dividend yield and has a dividend distribution monthly! Great holding for tax deferred account.
Berkshire Hathaway (BRK.B) Now that the stock has split bringing the price down to an affordable level and is option-able this is a no-brain er for a long term holding as a no fee mutual fund with the best fund manager free can buy, Warren Buffett. A quick computation shows me that The operating business is worth at least $30 a share and it's Investment portfolio at least $60 a share leaving me a value of roughly $90 a share and it is only trading at around $80 right now.
Veolia Environment (VE) This is the largest water treatment company in the world meaning it's great cash flow should continue as long as the world needs water, which is forever! It's close to it's 52 week low so we should see some appreciation in the stock while we collect that 5.5% yield.
Petro China (PTR) You know my portfolio wouldn't be complete without exposure to China. PTR has huge EPS, a good steady dividend, and a strengthening Yuan that will all help this one continue it's climb higher.
China Mobile (CHL) I round out the group with my favorite of the group and another China play. This will be the big long term mover as only about 50% of the Chinese population currently have cellular service compared with close to 90% in the U.S. so look for tens of millions of new subscribers in the next year or two. As this move happens we can collect the 3.5% dividend and sell well out of the money covered call to create income. All of this companies assets and revenue are yuan based and will appreciate in value to with the yuan.
Note: A majority of my long term holdings are now becoming option plays as well through selling covered calls against the stock which is the safest way to profit from options.
Provident Energy Trust: (PVX) This is a steady income machine with an almost 10% dividend yield and has a dividend distribution monthly! Great holding for tax deferred account.
Berkshire Hathaway (BRK.B) Now that the stock has split bringing the price down to an affordable level and is option-able this is a no-brain er for a long term holding as a no fee mutual fund with the best fund manager free can buy, Warren Buffett. A quick computation shows me that The operating business is worth at least $30 a share and it's Investment portfolio at least $60 a share leaving me a value of roughly $90 a share and it is only trading at around $80 right now.
Veolia Environment (VE) This is the largest water treatment company in the world meaning it's great cash flow should continue as long as the world needs water, which is forever! It's close to it's 52 week low so we should see some appreciation in the stock while we collect that 5.5% yield.
Petro China (PTR) You know my portfolio wouldn't be complete without exposure to China. PTR has huge EPS, a good steady dividend, and a strengthening Yuan that will all help this one continue it's climb higher.
China Mobile (CHL) I round out the group with my favorite of the group and another China play. This will be the big long term mover as only about 50% of the Chinese population currently have cellular service compared with close to 90% in the U.S. so look for tens of millions of new subscribers in the next year or two. As this move happens we can collect the 3.5% dividend and sell well out of the money covered call to create income. All of this companies assets and revenue are yuan based and will appreciate in value to with the yuan.
Wednesday, May 26, 2010
Today's Trades
Visn- Sold Jan $2.5 put at .55
I have ridden this stock to $12 taken a profit and now find my self chasing this bad boy down. Already sold $5 puts that are itm big time right now and also already sold Oct $2.5 puts. When the market recovers this one will triple for us.
GSH- Sold an Oct $15 put at $1.05
Guangshen Railway Co. Ltd, This a a stock I would like to own at some point. Good dividend yield, now near a 52 wk. low, and fills a void currently in my portfolio for transportation. Buffet is a big believer in the rails and due to my affinity for Chinese stocks this is the stock for me.
PKX- Sold Nov 80/75 put spread for $1.30
Posco Korea Steel, Another stock I have been following for awhile and as stocks have been on sale as of late it's a great time to start a position. BRK is invested at around the $75 level so I am calling a "Buffet Bottom" of $75 in the stock as the lowest this baby will go before being bought back up again. Posco has over $10 per share earnings and is the worlds most efficient steel producer getting margins other steel companies dream of. This will only get better when inflation starts taking materials prices higher.
A few orders that didn't fill today:
VE Jan 22.5/20 put spread for .80
PVX Dec 5 put for .35
Rino Dec 7.5/5 put spread .85
I have ridden this stock to $12 taken a profit and now find my self chasing this bad boy down. Already sold $5 puts that are itm big time right now and also already sold Oct $2.5 puts. When the market recovers this one will triple for us.
GSH- Sold an Oct $15 put at $1.05
Guangshen Railway Co. Ltd, This a a stock I would like to own at some point. Good dividend yield, now near a 52 wk. low, and fills a void currently in my portfolio for transportation. Buffet is a big believer in the rails and due to my affinity for Chinese stocks this is the stock for me.
PKX- Sold Nov 80/75 put spread for $1.30
Posco Korea Steel, Another stock I have been following for awhile and as stocks have been on sale as of late it's a great time to start a position. BRK is invested at around the $75 level so I am calling a "Buffet Bottom" of $75 in the stock as the lowest this baby will go before being bought back up again. Posco has over $10 per share earnings and is the worlds most efficient steel producer getting margins other steel companies dream of. This will only get better when inflation starts taking materials prices higher.
A few orders that didn't fill today:
VE Jan 22.5/20 put spread for .80
PVX Dec 5 put for .35
Rino Dec 7.5/5 put spread .85
Tuesday, May 18, 2010
Today's Trades
VE- Veolia is a company I have held for awhile and with the recent downturn in Europe this stock is now at great discount price. Since I wouldn't mind owning a few more shares I sold a May 25 put for .25 today. They are selling for .30 right now so I might sell another one tomorrow if I can get .35 for it. If the stock remains above $25 for the next three days I get to keep the money paid to me for the option, if it dips below $25 I get the stock at a .25 discount per share. It's like selling a limit order as my buddy Paul puts it.
VISN- So if you bought this stock as recommended yesterday you made a quick 5% today! As for me I sold an OCT $2.50 put for .35 today and closed out (bought) my July $5 calls for .15 booking a nice .50 profit!
PVX- This is one of my long term holdings that has doubled for me and continues to pay a great dividend. Today I sold a DEC $5 put for .15 which if put to me would give me the stock at about a 45% discount from today's price
VISN- So if you bought this stock as recommended yesterday you made a quick 5% today! As for me I sold an OCT $2.50 put for .35 today and closed out (bought) my July $5 calls for .15 booking a nice .50 profit!
PVX- This is one of my long term holdings that has doubled for me and continues to pay a great dividend. Today I sold a DEC $5 put for .15 which if put to me would give me the stock at about a 45% discount from today's price
Monday, May 17, 2010
VISN
With VISN at $3.28, an extreme discount, right now it would be worth starting a position if you don't have one already. I am placing an order to sell OCT $2.50 puts for .35 as we speak and already have a position in the stock on the long and short side. VISN has consistently beat earnings estimates and has the most unique advertising in the world. If you were considering BIDU this might be a better alternative.
Vision China Media Inc., VISN, operates an out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems in China. Its advertising network consists of digital television displays located on buses and in other selected locations, such as in subway trains in Beijing, that receive mobile digital television broadcasts of real-time content and advertising. The Company also operates a stationary advertising platform in subway stations in two major cities in China: Guangzhou and Shenzhen.
The only thing better than investing in this company would be to start your own version of this model here in the US! Anyone want to partner on this?
Vision China Media Inc., VISN, operates an out-of-home advertising network using real-time mobile digital television broadcasts to deliver content and advertising on mass transportation systems in China. Its advertising network consists of digital television displays located on buses and in other selected locations, such as in subway trains in Beijing, that receive mobile digital television broadcasts of real-time content and advertising. The Company also operates a stationary advertising platform in subway stations in two major cities in China: Guangzhou and Shenzhen.
The only thing better than investing in this company would be to start your own version of this model here in the US! Anyone want to partner on this?
Gold
Gold has gone on another 10% run since I booked some of my profits at $1100 just over a month ago so some of you may want to look at taking some off the table at this point. Although my 2010 goal is $1300 the prudent move is to book the profit on some of your position and be one of the few investors out there making profits while the market languishes.
AAPL
So with only a few days left until expiration I closed my AAPL position today at $1. Even with huge blowout earnings numbers and a tidal wave of momentum I managed to make a profit on a short AAPL options trade. If you recall I sold the options for $1.65 per share and now had to pay $1 to close it out leaving me a profit of .65 per share in less than a month's time. This gives me close to a 6% return on money put at risk, taking commissions into account, in a month's time.
Friday, April 23, 2010
AAPL and ONP Updates
AAPL
So with AAPL quickly hitting my max loss today there was no sense in closing the position. I will be waiting this one out hoping to catch a break unless the 260 call gets exercised against me. Options guru Paul has generously given me some ways to try and unwind this with less pain, but thanks to ONP's 10% run today I'm just going to lick my wounds and put the money into something I know better once I close it out.
ONP
"You down with ONP?" "Yea you know me!"
ONP made a huge 10% run today and 20+% run so far this month! I know some of you have taken profits and will look to ride this train next time it pulls back which would be wise to do since this one has been going on these 20% up and downs for months now. A better play would be to sell the 12.50 calls for $1.53 (bringing your cost basis down 14%!!) to lock in profits at this level and still have potential for another 15% in profits. So if you made 20+% like I have done this month on ONP you could set yourself up for a 50% gain if the stock goes to 12.50 and gets called away!
Thanks Naughty by Nature for the inspiration and Paul for the laugh today on the OPP take!
So with AAPL quickly hitting my max loss today there was no sense in closing the position. I will be waiting this one out hoping to catch a break unless the 260 call gets exercised against me. Options guru Paul has generously given me some ways to try and unwind this with less pain, but thanks to ONP's 10% run today I'm just going to lick my wounds and put the money into something I know better once I close it out.
ONP
"You down with ONP?" "Yea you know me!"
ONP made a huge 10% run today and 20+% run so far this month! I know some of you have taken profits and will look to ride this train next time it pulls back which would be wise to do since this one has been going on these 20% up and downs for months now. A better play would be to sell the 12.50 calls for $1.53 (bringing your cost basis down 14%!!) to lock in profits at this level and still have potential for another 15% in profits. So if you made 20+% like I have done this month on ONP you could set yourself up for a 50% gain if the stock goes to 12.50 and gets called away!
Thanks Naughty by Nature for the inspiration and Paul for the laugh today on the OPP take!
Thursday, April 22, 2010
Apple
Well the past two days have been ugly for people like myself standing in front of the herd. We have been trampled by the sheep, but aren't dead yet. There are still 28 days remaining on my position and since we are inching closer to my max loss at 270 I am going to ride it out for now and not close it out as planned unless the herd retreats and I can get out anywhere near even money. Since a majority of shares are institutionally owned I am looking for prudent money managers booking profits at this point to help me out. Also there is still a good chunk of time premium being paid for these calls that will erode quickly if I can make it closer to May expiration or have downward pressure on the stock.
Thursday, April 15, 2010
Updates
ONP
So I managed to sell the Nov 12.50 call for $1.15 against a portion of my shares this morning. This covered call is a typical safe option play to lock in some profits in case the stock slides down again as it did today. I basically was paid $115 per contact this morning to give someone the option of buying my shares for $12.50 per share between now and November. If the shares go above 12.50 and gets calles away selling at $12.50 would leave me a 34% profit. If they never get to $12.50 I still get to keep the $115 per contract! A definite easy money play if you ask me!
AAPL
So AAPL has continued the creep higher for the past few days, about 2.5%, but is still below my break-even of $161. All the news coming out seems pretty negative like the lawsuit that could stop the sale of all AAPL's touch screen device sales, the lack of 3g devices, overseas launch delay, and the fact that they just aren't selling enough Ipads to be meaningful to the bottom line. With all this the sheep keep grazing on AAPL and even have the wool to attack any naysayers! In the next coming week, with earnings on Tuesday, we will see if the sheep get slaughtered, as I expect, or if they just trample me on their way to $170. Stay tuned this should be interesting!
So I managed to sell the Nov 12.50 call for $1.15 against a portion of my shares this morning. This covered call is a typical safe option play to lock in some profits in case the stock slides down again as it did today. I basically was paid $115 per contact this morning to give someone the option of buying my shares for $12.50 per share between now and November. If the shares go above 12.50 and gets calles away selling at $12.50 would leave me a 34% profit. If they never get to $12.50 I still get to keep the $115 per contract! A definite easy money play if you ask me!
AAPL
So AAPL has continued the creep higher for the past few days, about 2.5%, but is still below my break-even of $161. All the news coming out seems pretty negative like the lawsuit that could stop the sale of all AAPL's touch screen device sales, the lack of 3g devices, overseas launch delay, and the fact that they just aren't selling enough Ipads to be meaningful to the bottom line. With all this the sheep keep grazing on AAPL and even have the wool to attack any naysayers! In the next coming week, with earnings on Tuesday, we will see if the sheep get slaughtered, as I expect, or if they just trample me on their way to $170. Stay tuned this should be interesting!
Tuesday, April 13, 2010
ONP Alert Again!
ONP has made another 17% for us and we can now take profits again. Now that Ive ridden this stock up 15%+ twice I can afford to leave some on the table in case this one runs higher. If this is your first time riding this baby take at least a quarter of your profits off the table.
Update:
Just found out from my TOS and options guru Paul that ONP has hit the options market! This is huge as it opens up a lot more ways to play this one. I will be working with Paul to try and figure out how this will affect the stock and also a few play that can be made with options. at the very least I will no longer be selling my shares as I can now sell covered calls against the shares now.
Update:
Just found out from my TOS and options guru Paul that ONP has hit the options market! This is huge as it opens up a lot more ways to play this one. I will be working with Paul to try and figure out how this will affect the stock and also a few play that can be made with options. at the very least I will no longer be selling my shares as I can now sell covered calls against the shares now.
Monday, April 12, 2010
Today's AAPL Trade
I am putting my money where my mouth is and making a bearish bet on AAPL today.
The order filled today: Sold May 10 260/270 call spread for $1.65 credit.
This is a very short term bet that AAPL will remain below $260 or go lower ahead of earnings this month. There may also be a possibility to make another bearish bet in the day or two immediately before earnings when IV usually reacts favorably for option sales.
The order filled today: Sold May 10 260/270 call spread for $1.65 credit.
This is a very short term bet that AAPL will remain below $260 or go lower ahead of earnings this month. There may also be a possibility to make another bearish bet in the day or two immediately before earnings when IV usually reacts favorably for option sales.
Sunday, April 11, 2010
AAPL Ipad Sales
So I am looking at the new Ipad and how it will affect the stock of AAPL and think it will be disappointing. Apple said first day sales were 300k which is about half of what a great first day of sales would have been, based on analysts estimates of 600-700k, and on par with what they estimated to be average. Another negative comment was that 75% of the first day sales were pre-order customers so only about 75k were people buying on "impulse" and might be waiting for the 3g version like myself.
I personally was at a shopping mall that first day and stopped by the apple store. There were people playing with the demo Ipads, but no hectic line or chaos as expected on the first day of release. A few customers walked out with new Ipads, but most were just there to check it out. They also didn't have the 3g version which most likely negatively affected their sales.
Apple tried to play up the "1 million downloads" to put a positive twist on the launch, but most users know that people only pay for about half of these and mostly download all the free apps they can before actually buying any.
Verdict:
I see the Ipad adding to Apple's bottom line through the sale of devices and apps, though not as significantly as the Iphone did upon it's debut. I believe the stock to be pricing in a larger impact from the Ipad than will actually be experienced in the next quarters earnings. Dare I say that Apple will not beat earnings estimates for the first time in a while? I say it will depend on the sales of the 3g device later this month.
My recommendation: If you have a nice profit on AAPL it might be time to take some off the table at the $245-250 level.
For the record: I personally don't own any AAPL positions, but I am looking at bearish options plays and will be buying an Ipad when the 3g version hits stores.
I personally was at a shopping mall that first day and stopped by the apple store. There were people playing with the demo Ipads, but no hectic line or chaos as expected on the first day of release. A few customers walked out with new Ipads, but most were just there to check it out. They also didn't have the 3g version which most likely negatively affected their sales.
Apple tried to play up the "1 million downloads" to put a positive twist on the launch, but most users know that people only pay for about half of these and mostly download all the free apps they can before actually buying any.
Verdict:
I see the Ipad adding to Apple's bottom line through the sale of devices and apps, though not as significantly as the Iphone did upon it's debut. I believe the stock to be pricing in a larger impact from the Ipad than will actually be experienced in the next quarters earnings. Dare I say that Apple will not beat earnings estimates for the first time in a while? I say it will depend on the sales of the 3g device later this month.
My recommendation: If you have a nice profit on AAPL it might be time to take some off the table at the $245-250 level.
For the record: I personally don't own any AAPL positions, but I am looking at bearish options plays and will be buying an Ipad when the 3g version hits stores.
Monday, April 5, 2010
Who Pays to Store Cash?
So following my gold sale I was looking for a place to store the cash while I research and sell/buy options and found that not many banks are paying to hold your cash these days. Through my search I stumbled upon Ally bank who currently pay 1.29% for savings or money market accounts which is pretty good considering what is out there now.
Ally is an online only bank that you can link to your current bank and or investment accounts and use as a cash storage earning interest. Transfers seem to go through in 1-2 business days which is normal and I haven't had trouble in the week or so I have had the account. Opening the account was also pretty easy and was complete in one week. linking accounts took 2-3 business days to verify. All in all I am happy so far in my new cash storage bank.
If you are looking for a good rate CD or have one expiring soon that you want to roll over into a higher yielding one Ally also has a good deal on that. Here is how to take advantage:
Basically I would suggest you open one of their 5 year CD's at 2.99%. This CD has an early withdrawal penalty of only two months interest which is the most lenient you will find at any bank. Cash it out after one year and you will end up with close to a 2.5% yield after the penalty. If you keep it for two years even with the minuscule penalty you would earn over 2.9%, I challenge you to find a better 12 or 24 month CD rate than that!
Ally is an online only bank that you can link to your current bank and or investment accounts and use as a cash storage earning interest. Transfers seem to go through in 1-2 business days which is normal and I haven't had trouble in the week or so I have had the account. Opening the account was also pretty easy and was complete in one week. linking accounts took 2-3 business days to verify. All in all I am happy so far in my new cash storage bank.
If you are looking for a good rate CD or have one expiring soon that you want to roll over into a higher yielding one Ally also has a good deal on that. Here is how to take advantage:
Basically I would suggest you open one of their 5 year CD's at 2.99%. This CD has an early withdrawal penalty of only two months interest which is the most lenient you will find at any bank. Cash it out after one year and you will end up with close to a 2.5% yield after the penalty. If you keep it for two years even with the minuscule penalty you would earn over 2.9%, I challenge you to find a better 12 or 24 month CD rate than that!
Wednesday, March 31, 2010
ONP Alert Again!
If you missed this one last week you have another chance. Last weeks buy on Monday sell on Friday netted a nice return and a buy this week should be good for another nice return after April 6.
The big news that brought the stock back down to the $8.30 level was the issue of three million shares priced at $8.25/share. This is good news for the stock as it will improve the liquidity of shares which should stimulate more volume and increase the amount of institutional investors. Also look for an analyst or two to begin covering this stock soon. Most of these shares will most likely be purchased by institutions and then resold at a nice profit.
If you are able to buy at or near this price between now and April 6 you should be in for another ride to $10. Even though I just bought and sold this stock twice already in the past month and once just last week I bought again today at $8.28.
The big news that brought the stock back down to the $8.30 level was the issue of three million shares priced at $8.25/share. This is good news for the stock as it will improve the liquidity of shares which should stimulate more volume and increase the amount of institutional investors. Also look for an analyst or two to begin covering this stock soon. Most of these shares will most likely be purchased by institutions and then resold at a nice profit.
If you are able to buy at or near this price between now and April 6 you should be in for another ride to $10. Even though I just bought and sold this stock twice already in the past month and once just last week I bought again today at $8.28.
Tuesday, March 30, 2010
Gold Update
Well the time has come to unload some gold. After a huge run the past few years I am reducing my holdings by 10% @ $1105/oz. Although I believe gold will reach $1300/oz sometime this year I am going to start using the enormous profits made in gold to start playing with options trading. I resisted the urge to sell at $1000 twice but $1100 is just too good to let go and $1300 later this year will be my next 10% unloading point.
Sunday, March 28, 2010
Alerts Updates
Well in just one week ONP has risen back near the $10 level. I hope some of you were able to make some easy money on this Alert I sent out on Monday. Might be tempted to take some profits if you were able to make 10% on it last week, but I do anticipate more money to be made in this stock for the future as we can see the huge surge of volume buying that brought the stock back so quickly. This usually indicates that a large institutional buyer starting or adding to their position.
Visn on the other hand has been an option play for the week. I sold July 5 and October 5 put options for .65 and .95 cents respectively with the advice of my options guru Paul.
Visn on the other hand has been an option play for the week. I sold July 5 and October 5 put options for .65 and .95 cents respectively with the advice of my options guru Paul.
Monday, March 22, 2010
Two Alerts!
ONP took a slide on Friday and was a great opportunity to initiate a position in the stock. Even with it bouncing back over 8% today I am trying to get in this stock before it get back to the $10 level.
VISN is another great buy right now and has option plays as well! I sold my position in this stock in November above the $9 level, after it doubled for me, and have been watching and waiting for a chance to get back in. This company has an advertising angle that is unique to any other in the world. I am going to try an option play this time to try and initiate a position and catch another double.
VISN is another great buy right now and has option plays as well! I sold my position in this stock in November above the $9 level, after it doubled for me, and have been watching and waiting for a chance to get back in. This company has an advertising angle that is unique to any other in the world. I am going to try an option play this time to try and initiate a position and catch another double.
Friday, February 26, 2010
Paper Play
So I was researching international companies to invest in and came across International Paper, symbol IP. This company is turning the corner to growth, steadily increasing cash flow, and has a great business that sells its products worldwide. It looks like with so much positive cash flow recently that they might even bring their dividend back up. My mind started wondering if there was a Chinese equivalent when I stumbled on Orient Paper.
Now Orient Paper, symbol ONP, looks incredibly cheap compared to IP, only a PE of 9 compared to IP's PE of 15, and is in a tremendous growth phase right now. ONP is well off it's 52 wk high and looks better now then it did when at it's high. They are operating at a 50% margin meaning for every ton of paper it sells they double their money! ONP revenue increased almost 70% year over year last quarter and doubled gross and net profit! Can you find any other company that is putting up growth number like these, making money, and trading at only a 9 PE? This stock is a definite buy and I am starting a position as you read this.
What do you think about the boring business of paper production? Will it get better as the economy gets better? Can you find me a better option?
Now Orient Paper, symbol ONP, looks incredibly cheap compared to IP, only a PE of 9 compared to IP's PE of 15, and is in a tremendous growth phase right now. ONP is well off it's 52 wk high and looks better now then it did when at it's high. They are operating at a 50% margin meaning for every ton of paper it sells they double their money! ONP revenue increased almost 70% year over year last quarter and doubled gross and net profit! Can you find any other company that is putting up growth number like these, making money, and trading at only a 9 PE? This stock is a definite buy and I am starting a position as you read this.
What do you think about the boring business of paper production? Will it get better as the economy gets better? Can you find me a better option?
Friday, February 12, 2010
China Slowing? Time to Pull Out?
So all the headlines today say China is slowing lending which will slow growth and hurt our exports to them in turn slowing our recovery as well. Let's think about this rationally for a moment. What they did was increase the mandatory reserves required by lenders by a half percent. This they hope will curtail some of the wreckless lending on the part of Banks and other financial institutions similar to what happened here in the US.
The people of China don't use much if any personal credit lines as they like to pay for everything cash. Just ask the big credit card companies who have a hard time selling their wares to the Chinese people. So this move won't affect the spending habits of consumers in China in any big way.
So the question I ask is who is borrowing this "affected" credit and what sectors are the borrowers in?
Many borrowers are for real estate, won't affect our exports much, but should help to cool the inferno of a housing market they have.
Others are large companies borrowing to secure raw materials for production of products, this affects thier exports to us which are already in decline due to our depression and should help us get raw materials cheaper to make products to export to them, seems a win win for the U.S.
So I ask you, how is this small required reserve increase bad for anyones economy? If we had done anything remotely similar a few years ago we would have not had the huge bubble in housing which has bust and left us in this depression.
Hopefully these headlines will help me get some of the Chinese stocks on sale!
The people of China don't use much if any personal credit lines as they like to pay for everything cash. Just ask the big credit card companies who have a hard time selling their wares to the Chinese people. So this move won't affect the spending habits of consumers in China in any big way.
So the question I ask is who is borrowing this "affected" credit and what sectors are the borrowers in?
Many borrowers are for real estate, won't affect our exports much, but should help to cool the inferno of a housing market they have.
Others are large companies borrowing to secure raw materials for production of products, this affects thier exports to us which are already in decline due to our depression and should help us get raw materials cheaper to make products to export to them, seems a win win for the U.S.
So I ask you, how is this small required reserve increase bad for anyones economy? If we had done anything remotely similar a few years ago we would have not had the huge bubble in housing which has bust and left us in this depression.
Hopefully these headlines will help me get some of the Chinese stocks on sale!
Thursday, February 11, 2010
What I am Researching
Well it's been a long time since my last post, but I am still looking in the same place for stocks to buy, China. Here's is a list of what I am currently researching:
Guangshen Railway Co. symbol GSH
Income and balance sheet look good and if Buffett thinks rails will do well in the US I can only imagine how well the rails in China will do! Chinese imports are skyrocketing as they start to use the trade surplus they have accumulated to help increase the incomes of it's people. All these imports will need the infrastructure of the rails to move these from the ports to the people and GSH will be a major beneficiary. How about an almost 3% yield to collect while you watch this rail roll?
American DairyInc. symbol ADY
This stock quadrupled for me, I took profits, no longer have a position, and now that it has retreated by about 45% I am gaining interest in building a position again. ADY is the premier Milk product company, especially for infants, in China and was not in any way involved with the tainted milk scare that happened in 2008. Looking to start a position around the $20 level.
Guangshen Railway Co. symbol GSH
Income and balance sheet look good and if Buffett thinks rails will do well in the US I can only imagine how well the rails in China will do! Chinese imports are skyrocketing as they start to use the trade surplus they have accumulated to help increase the incomes of it's people. All these imports will need the infrastructure of the rails to move these from the ports to the people and GSH will be a major beneficiary. How about an almost 3% yield to collect while you watch this rail roll?
American DairyInc. symbol ADY
This stock quadrupled for me, I took profits, no longer have a position, and now that it has retreated by about 45% I am gaining interest in building a position again. ADY is the premier Milk product company, especially for infants, in China and was not in any way involved with the tainted milk scare that happened in 2008. Looking to start a position around the $20 level.
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