Options lovers, news junkies, stock market enthusiasts

Posts tagged ‘options’

Technology Stocks in the Spotlight!! Call Options?! Juniper Networks… By: Tim Bolger

Technology Stocks have been on a tear in early 2012 and have had a great run over the past few years…I am following a number of Tech stocks and several of these will be in focus over the next few months on Optionshoney.com. Dell is sinking over 6% today after an unfavorable quarterly earnings report and alot of selling among investors today. Apple hit an all time high of $526 a share last week and has been an absolutely amazing stock to own over the past several years.

What stock is going to pop next?! Well, I have several on the radar and reiterate how options trading takes alot of precise timing and patience before we make a trade.  Many stocks will pop, but our timing is key to benefit from big moves in a stock…

So what is the options play?!

I am a big fan of Sunnyvale, CA based Juniper Networks (JNPR) and think the stock could trade into the mid 30s in 2012. A quick bio on Juniper Networks (JNPR) courtesy of Yahoo Finance:  Juniper Networks, Inc. designs, develops, and sells products and services that provide network infrastructure to create environments for the deployment of services and applications over a single network. The company’s Infrastructure segment primarily provides scalable routing and switching products that control and direct network traffic. Its products include Internet protocol (IP) routing and carrier Ethernet routing portfolio, and Ethernet switching portfolio comprising T-series, E-series, MX-series, VXA Series, and EX-series, as well as JCS, TX, and TX plus products. The company’s SLT segment offers firewall virtual private network systems and appliances, SRX services gateways, secure socket layer virtual private network appliances, intrusion detection and prevention appliances, the J-series router product family, and wide area network optimization platforms. Its products protect the network and data on the network, enhances existing bandwidth, and accelerates applications. In addition, the company provides Junos platform comprising the Junos Space network application platform and Junos Pulse integrated, multi-service network client, which enables its customers to expand network software into application space and deploy software clients to control delivery, as well as offers support, professional, and educational services. It sells its products and services through direct sales force, distributors, value-added resellers, and original equipment manufacturer partners to wireline, wireless, and cable operators; Internet content and application providers; businesses; federal, state, and local governments; and research and education institutions. Juniper Networks, Inc. was founded in 1996 and is headquartered in Sunnyvale, California.

Forbes is reporting today on Juniper’s acquisition of Mykonos Software: Juniper Buys Mykonos Software For $80 Million In Cashat Forbes(Wed 9:35AM EST)

Trade#1: I like the JNPR Mar 16, 2012 $24 strike Call Options for .95 cents a contract. I can purchase 10 contracts for $950 plus trading fees and that will get me long 1000 shares of JNPR at $24 per share. This trade is speculating on a 10% move to the upside in JNPR shares over the next 3 weeks. If shares trade $26, we will double our money at a minimum…Attached is the March 16, 2012 expiration Options Chains for JNPR courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=JNPR+Options.

Trade#2: I like buying some longer term Call Options on JNPR and would be a buyer of the JNPR July 20, 2012 $23 strike Call Options for $2.90 a contract. I can purchase 10 contracts for $2,900 plus trading fees as a means to get long 1000 shares of JNPR stock at a strike price of $23 per share. Attached is the JNPR July 20, 2012 Expiration Options Chains courtesy of Yahoo Finance:http://finance.yahoo.com/q/op?s=JNPR&m=2012-07. I am looking for JNPR shares to trade $30 or higher before the expiration of these contracts. If the stock trades over $30 per share in the next few months, my 10 contracts would be worth over $7,000. Good luck to all of JNPR Bulls!! I would also be a buyer of the stock at $24 or less per share.  I strongly believe that Juniper will be a great stock over the next couple of years and will significantly outperform the major market indexes.  Additionally, Juniper is a potential acquisition target for a much larger Technology company. I believe that a takeover of Juniper would be at a substantial premium to where the stock is trading at today. Currently, JNPR is trading at $24.19 and is up over 1.75% today (11:19 a.m. Eastern time)…

See below a 3 month technical chart on Juniper Networks(JNPR) courtesy of Fidelity:

S&P 500
DJIA
NASDAQ
Industry
Chart
Advertisements

Big Shake-up at Diamond Foods…This is Totally Nutz!!! CEO and CFO are Out?!. Options Honey?! By: Tim Bolger

Shares of San Francisco based snack food maker Diamond Foods(DMND) tanked over 42% on huge volume this morning after the company announced yesterday evening that they would have to restate there 2010-2011 financial statements following the negative results of a 3 month Audit investigation that was not favorable for DMND shareholders in the short term… The audit was conducted because of an alleged accounting scandal over the momentum payment from DMND to its Walnut growers.. To put the icing on the cake, the CEO and CFO are being removed from the company.  Definitely not a fun day for those long the stock…However, I still love Diamond Foods Wasabi Almonds and the rest of their yummy products. So, I bought shares of the stock on all of this bad news today.  Consumers will continue to gobble up there tasty nuts around the globe for sure and this is a short term thunderstorm for the company that provides a great opportunity to buy the shares at a deep discount….

So what is the Options play?!  Diamond Foods: http://www.diamondfoods.com. Check out this article written by the Wall St. Journal today on Diamond Foods. The WSJ reports a record trading volume day in Put and Call Options on Diamond Foods Inc.: http://blogs.wsj.com/marketbeat/2012/02/09/taking-a-bullish-flyer-on-diamond-foods/?mod=yahoo_hs.

WSJ Reports: Diamond Food CFO’s To-Dos: Restate, Then Rebuild…

 http://blogs.wsj.com/cfo/2012/02/09/diamond-food-cfos-to-dos-restate-then-rebuild/?mod=yahoo_hs

I purchased the Feb 17, 2012 $23 strike Call Options on DMND today for $1.45 a contract and would be a buyer of the longer term Call Options as well. Attached is the Options Chains for the DMND June 15, 2012 Put/Call Options courtesy of Yahoo Finance:  http://finance.yahoo.com/q/op?s=DMND&m=2012-06. I would be a buyer of the DMND $22.50 strike Call Options for $3.40.  I am also a buyer of the stock under $23  a share and believe it is a great long term investment.  I love San Francisco and love this SF Nut Company!!! The Pringles acquisition may not happen now because of this terrible news today…however, I would personally prefer the company not to purchase Pringles from Procter and Gamble and feel that DMND is paying way too large a premium for this brand name chip franchise. Reuters reports:Procter & Gamble likely to terminate Pringles deal with Diamond Foods, NYT saystheflyonthewall.com (Thu 11:47AM EST).  Stay tuned to Optionshoney.com for more Options plays… 🙂

Check out the ten day chart of DMND courtesy of Fidelity Investments:

Chart

E-Commerce China DangDang Inc(Dang) Soaring in January! Call Options Active! By: Tim Bolger

Chinese E-commerce company DangDang Inc(Dang) has been soaring in the past month and is up big this week on heavy volume. Dang profile: http://finance.yahoo.com/q/pr?s=DANG+Profile. The shares may continue to see huge upside over the long run and is a high growth/high beta stock.  It was recently announced that famous institutional money manager Tiger Global Management has increased there holding in Dang and is the largest institutional shareholder of the company. Clearly, they are betting on the long term growth of Dang as well and have an extremely successful track record of making money in the global equity markets.  Check out this recent article by Seeking AlphaDangdang: Like Rolling Back Time To Buy Amazon At $6at Seeking Alpha(Tue, Jan 17).                                                        

So what is the Options play on Dang??

Options Trade#1:  I like selling the Dang Feb 17, 2012 7 strike Put Options for .65 cents a contract. If I sell 10 contracts I will collect a premium of $650 minus trading fees. If the stock closes above $7 at expiration, I will make $650 minus fees. Worst case scenario, I get exercised on the shares and I am comfortable being long the stock at $7 a share.  By selling the puts it will help finance the potential purchase of 1000 shares of Dang at $7.  Ten contracts x 100 shares per contract=1000 shares. To put on this trade, I will need $7,000 in collateral in my brokerage account in case I get exercised on the shares of stock. Here is the yahoofinance options chain http://finance.yahoo.com/q/op?s=DANG&m=2012-02.

Options Trade#2: For the big Dang bulls, I would think about buying the Dang Jun 15 2012 8 and 9 Call Optionshttp://finance.yahoo.com/q/op?s=DANG&m=2012-06 I like the 8 strike Calls at .95 cents and the 9 strike Calls at .45 cents on a pullback in the stock to around 6.75.   I also like buying the 1o strike leap call options on Dang.  I would think about buying the Dang Jan 17, 2014 10 strike Call Options for around 1.90 a contract.  http://finance.yahoo.com/q/op?s=DANG&m=2014-01. If Dang stock trades back to over 30 in the next few years, these leap call options will be worth big money!!  Stay tuned for more action on optionshoney.com.

http://finance.yahoo.com/q/ta?s=DANG&t=6m&l=on&z=l&q=l&p=&a=&c=

Chart forE-Commerce China Dangdang Inc. (DANG)

Genworth Financial(GNW) Roaring Higher! Does Housing Bottom in 2012? By: Tim Bolger

Genworth Financial is a financial holding company, with its core business focused on selling insurance and additionally provides wealth management, investment, and financial solutions for individuals in the U.S. and around the World.  The three main facets of the business are: Retirement and Protection, International, and U.S. Mortgage Insurance.  See the full profile at http://finance.yahoo.com/q/pr?s=GNW+Profile.  The company has been very profitable historically, but the black swan events of the U.S. housing crisis and an unprecedented amount of defaults on mortgage loans that the company had insured led to alot of bleeding for GNW shareholders the last few years.  I have been following the stock for four years and I am beginning to see alot of value in the stock.  I believe that GNW will make it out of this housing mess alive and that it is well positioned to profit from a recovery in housing.  I strongly feel that long term investors buying more GNW shares on this temporary weakness in share price and peaking number of mortgage defaults will be rewarded in 2-3 years when the storm blows over.

GNW has been crushed over the past few years and has a high beta of 2.9 for all those momentum players out there.  I think that housing bottoms in the next 12-15 months and a significant decline in U.S. and European mortgage defaults would be great news for GNW investors.  Once the Mortgage insurance unit at GNW stabilizes and starts making money again, this will be the major catalyst and turning point for GNW stock to soar much higher.

From a deep value investor standpoint, currently GNW trades at $8.22 with a .24 Price to Book, .37 Price to Sales, and has a forward Dec 31, 2012 Price to Earnings of 6.5.  Those are extremely cheap stock valuation numbers that greatly support my thesis for buying GNW shares for the long term.  This stock could trade back to $24 a share and still be trading at only .75 book value. Wow!! Good luck to all of you Bulls…

GNW has rallied over 20% in the past 30 days.  I think the party for GNW shareholders has just begun.  Several financial stocks are rallying this week.  Check out my post yesterday on Goldman Sachs here https://optionshoney.wordpress.com/2012/01/18/goldman-sachsgs-call-options-active-on-q42011-earnings-beat-by-tim-bolger/ . Any traders that bought GS call options on my previous note made lots of money overnight as GS continues to rally higher today. Bank of America and several other financial stocks are up big again today as well.

GNW reports earnings on Feb 2, 2012.  Remember it is always a gamble to buy a stock before earnings releases, but I think GNW will beat Wall St. Analyst expectations and therefore, I want to own the stock and Call Options prior to the earnings release.  If they beat the street, the stock could sail 10% higher on positive news, especially on any positive report on a decline in mortgage defaults for their Mortgage Insurance business.  What is the Options Play on GNW?

Options Trade#1: If you are bullish on GNW going foward and would like to get long exposure to a continued rise in GNW shares, I  would think about buying the Mar 16, 2012 9 and 10 strike Call Options.  If GNW blows out earnings on Feb 2, 2012 these contracts will double or triple in value very quickly.  Remember that if GNW has a poor earnings report, these contracts will likely lose 30 to 50% on a bad report.  Alot depends on the EPS for the quarter and any forward looking comments by management that the housing mess could be nearing an end and any improvements in there mortgage insurance business. Attached are the Options Chains for this hypothetical trade courtesy of YahooFinance.  http://finance.yahoo.com/q/op?s=GNW&m=2012-03  I like the March 9 strike call options at a price of .30 cents and the March 10 strike call options for .09 cents.

Options Trade #2: For a more conservative and longer term trade, I also like buying the GNW Jan 18, 2013 7.50 Call Options for 1.90 a contract. Good luck to all and stay tuned for more news on GNW and the financials. Trading involves inherent risks and please consult your financial advisor before buying or selling any stocks/options. Optionshoney.com disclaimer.

http://finance.yahoo.com/q/ta?s=GNW+Basic+Tech.+Analysis&t=3m

Chart forGenworth Financial Inc. (GNW)

Goldman Sachs(GS) Call Options Active on Q42011 Earnings Beat!! By: Tim Bolger

Goldman Sachs(GS) is arguably the most powerful and innovative investment firm on planet Earth and runs Wall St. in my opinion.  Run by Wall St. legend Lloyd Blankfein (CEO of GS), they are at the forefront of several capital markets deals, stellar traders, have an amazing advisory services business, investment management, investment banking, etc.  Many of the smartest financial professionals in the world flock to Goldman for an opportunity to make millions of dollars.  If you work at Goldman, in my opinion you are the creme de la creme of financial services pros…When Goldman talks, investors listen…whether they like the news they are hearing or not. GS can move markets with their fundamental research and analysis of the markets.  GS is also brilliant on the technical side of trades as well and I think they are among the best trading firms in the world…they definitely have a spectacular track record in that department…

Despite their brilliant fleet of financial wizards, GS stock had a terrible year in 2011 alongside a majority of financial stocks and declined over 45%. Today, they beat Wall St. earnings estimates and the stock is up over 5% on big volume. GS earned $1.01 Billion in Q4 2011 and had Earnings Per Share(EPS) of $1.84 for the quarter. Fourth quarter EPS beat the street by a whopping 60 cents a share and investors are reacting very positively to this quarterly news report and piling into both the shares of stock and options contracts. Is the slide in GS shares over?? Is it time to get in the shares for the long term??  I would argue that owning the shares anywhere around a $100 is a great buying opportunity for longer term investors who believe in both the survival of Wall Street and the global capital markets…I certainly do and GS will be one of the biggest and most powerful whales in the sea. Businesses need capital for growth/survival in difficult economic cycles and to compete in this ever fast changing world…

GS Call Options are very active today and might be time to load up…Check out the front month GS 105 strike Jan 20,2012 Call Options being bought like hot cakes today as investors pile in to position for a bigger move up in the shares over the next few days.  Here is the options chain for Jan 20, 2012:  http://finance.yahoo.com/q/op?s=GS+Options. This is a very risky but potentially lucrative trade for those traders with a hunger for risk and is a trade being executed by many professional options traders and savvy investors today.  A more conservative play would be to think about buying the April 20, 2012 110 or 115 strike Call Options on GS to position yourself for a continued rise in the shares. Here is the GS April 20, 2012 Options chains:  http://finance.yahoo.com/q/op?s=GS&m=2012-04. GS traded close to 175 last year and definitely has alot of room to run if the stock continues to gain momentum and more positive investor sentiment. If a few analysts upgrade the stock as well, that would be very favorable for GS shares and could easily send the shares higher to 125+ in the next couple of months…We shall see and only time will tell the story… On a bearish note, the markets may be nearing a short term top and if the market falls, GS may decline with the rest of the equity markets…We might want to wait on the side line for a pullback in the shares and the overall markets before jumping into this trade on GS. Remember patience and timing is key to making successful Options trades…And yes alot of luck is involved in making money with Options as well…No investor or trader has a magic crystal ball that will tell for certain what actually will happen on Wall Street or to any individual stocks for that matter. Check out the 5 day chart on GS courtesy of YahooFinance below. Big volume today and the shares are spiking to the upside!! Optionshoney.com disclaimer.  Until next time folks. Stay tuned for more…

—Tim Bolger

http://finance.yahoo.com/q/ta?s=GS&t=5d&l=on&z=l&q=l&p=&a=&c=

Chart forThe Goldman Sachs Group, Inc. (GS)

Can You Say Goldilox is Soaring?? Flight to Safety? This Shiny Metal is Hott in January!! Gold Options Honey? By: Tim Bolger

Who does not love Gold?? Well, maybe not everyone because it does not pay a dividend to investors.  But, I love this shiny metal!! Like Gold or not, it has been a big winner for many investors over the past few years and has provided alot of alpha to investment portfolios that would have otherwise suffered severely from high exposure to financial stocks, the sovereign debt crisis, volatile global stock markets and high unemployment around the globe.

We all know that thus far, the Federal Reserve’s monetary policy has involved printing way too many U.S. dollars to fight this recession, has kept the Federal Funds Rate at historic lows, and the result has been a very weak U.S. dollar… I translate the current economic scenario as one that makes me want to buy lots of Goldlilox!! I love gold coins and love owning the Gld.  Getting long exposure to Gold is easiest to get with the Gld (SPDR Gold Trust).  Gold hit a high of over $1,900 per ounce in 2011 and then got hammered along with several other precious metals in the month of Dec 2011. Gold fell close to $1,500 an ounce…that was painful for many Gold bulls in the money of Dec and led them to flee to the sidelines, many of which were forced to sell because of big margin calls on this commodity. Margin gives you great leverage at times, but it is very risky for volatile commodities in the short and long run…Margin calls can wipe you out of cash and trading on Margin is not recommended for many retail or institutional investors.

The sharp sell off in Gold in the month of Dec 2011 spooked alot of Gold bugs out of this shiny precious metal. Was the massive gold sell off just a huge head fake or is the bull run in Gold over?!…I think it was more of a short term correction in the shiny yellow metal…the sell off I believe was further exacerbated by lots of profit taking, margin calls and a short term phenomena. I am a firm believer in owing Gold for the long term and as a means to protect wealth…I believe Gold is a great safe haven from all of the macro-economic uncertainty prevailing around the globe!! Gold protects us against a weak global equity market and a weak U.S. dollar(which means high inflation).  Gold is a great hedge against major global economic issues(eg sovereign debt crisis in Europe), but I also believe that Gold can still run to $2,100 an ounce even if the global equity markets continue to move higher…Over the past 3 weeks we have seen Gold spike higher and I think the Gold train continues to run higher baby!!

Options trade#1: Yahoofinance Gld Jun 15, 2012 Options chain: http://finance.yahoo.com/q/op?s=GLD&m=2012-06.  I would consider buying the Gld 165 Jun 15, 2012 Call Options for $6.00 a contract. 5 contracts will cost me $3,000 plus trading fees and get me long exposure to Gold(500 shares of the Gld SPDR Gold Trust at $165 a share). If Gld trades to 175 before this options’ expiration date, this trade will be worth $5,000+. Take a look at the yahoofinance chart below on the Gld. Gld has moved significantly higher after being crushed in the month of December and I believe the longer term trend is to the upside. Good luck longs and remember that this is just a hypothetical scenario for everyone. Consult your financial advisor before making any trades…see the Optionshoney disclaimer. Options trading is not for all investors and is very risky!! Do not play if you cannot afford to lose all of your money invested in the contracts you may decide to purchase. Optionshoney  disclaimer.

The more conservative play is just buying these lovely American Eagle Gold Coins exhibited below and hold them forever!! Several other Gold Coins and Gold Bars are available for purchase from vendors such as Monex.com. Photo is courtesy of http://www.monex.com:

American Gold Eagle Coins - Buy Gold American Eagles

Chart forSPDR Gold Shares (GLD)

Hecla Mining Pounded on Huge Volume!! Let’s Mine the Honey with Options… By: Timmy B.

Hecla Mining(HL) is down on heavy volume today as Reuters reports: UPDATE 1-Hecla cuts 2012 silver production outlook at Reuters(Wed 8:37AM EST).  Hecla Mining was originally founded in 1891.  Hecla is headquartered in Coeur d’Alene, Idaho and has a majority of its mining operations in the U.S. and Mexico.  Hecla’s primary business focuses on the discovery, production, and marketing of the following metals: gold, silver, lead, and zinc.

Hecla paid a .02 cent dividend on Nov 16, 2011 and traded to an intraday high of $11.56 on Jan. 3, 2011. Personally, I feel that Hecla is being punished severely in the short term by this news on cutting it’s 2012 silver production outlook.  My thesis is that this is a short term thunderstorm for Hecla Mining and that with the continued sovereign debt crisis around the globe, printing more U.S. dollars and inflation on the horizon, metals continue their long term trend higher. Higher metals prices will lead to higher profits and revenues for mining companies like Hecla Mining.

I definitely like the stock at these price levels and HL is trading down over 26% today, with an intraday low of $4.25.  I think the best trade here can be made using “Options” to benefit from the weakness in shares today.

So, the million dollar question is,  how do we make money on HL share price weakness?? Remember, one of the keys to profiting from options is patience and executing our trades at the best time, in an attempt to achieve our end goal of making money!! Tens of thousands of trades exist at all times and we seek to discover some of the best here for our followers at OptionsHoney.com.  Timing is so important to making money in the short and long run. Remember time value+intrinsic value=option premium we pay for the right to buy or sell puts/calls. In addition, high levels of volatility increase option premiums. When stocks fall significantly, the cost to protect these shares with put options rising significantly. This creates opportunity for the trade I want to make on HL today.

Option Trade#1 on HL: I like selling the HL Feb 18 4 puts for .25 cents. By selling 40 HL contracts, we collect a premium of $1,000($25 per contract x 40 contracts sold). If HL shares close above $4 at Feb 18 expiration we profit the $1,000 minus trading fees. Worst case scenario, we get exercised if the shares decline below $4 at expiration of the contracts and we have to purchase 4,ooo shares (40 contracts x 100 shares per contract) of HL at $4 a share for a net cost of $15,000 plus trading commissions (16,000 gross to purchase shares-$1,000 initial credit received for selling the $4 strike put options).  It is very important to remember that we need $16,000 in cash in our brokerage account to make this options trade as collateral to buy the shares of stock at $4, if we get exercised at expiration. Selling options is alot more sophisticated than just buying puts or calls. Feel free to ask questions that you may have.

Long term, I believe Metals and HL will trend much higher.  I am comfortable with the worst case scenario of having to go long HL shares at $4 if we get exercised.  Selling the put options helps me finance the potential purchase of these shares and take advantage of the increased volatility in HL shares with the bad news reported today.

Option Trade#2 on HL: I like buying the HL Mar 17 2012 $5 strike calls for .30 cents.  I can buy 10 contracts for only $300 and have great exposure to a near term bounce in the shares after this huge sell off today. The advantage of buying the calls is that I do not have any obligation to buy the underlying asset and cannot be exercised if the shares expire below $5 at expiration. My total risk of buying the $5 Mar calls is the $300 (10 contracts x $30 a contract)l plus trading fees.

It’s important to note that your broker is required to exercise those call options on you, even if they are only a penny in the money (meaning you get exercised if HL is $5.01 at expiration). To avoid being exercised, you need to call your broker’s trade desk and tell them not to buy the shares…Buying the shares would also require $5,000 (1,000 shares at $5 each) in cash in your brokerage account.

Chart

Source of Hecla Mining Chart: Fidelity Investments

Show me the honey!!! The Buzzzzzzzzzzzzz goes on and on baby!!

–Timmy B

Tag Cloud