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Posts tagged ‘San Francisco’

Diamond Foods Spiking 6% After Big Sell Off Yesterday!! Call Options?! By: Tim Bolger

Just a quick note on Diamond Foods(DMND). I posted an article yesterday: http://optionshoney.com/2012/02/09/big-shake-up-at-diamond-foods-this-is-totally-nutz-ceo-and-cfo-are-out-options-honey/recommending that investors buy shares of the San Francisco snack food maker on a huge 42% decline in the shares. DMND is up close to 6% today, on a day in the red across all the major U.S. stock indexes.  Additionally, I suggested buying the Call Options on DMND to take advantage of yesterday’s tremendous share weakness.  I bought the Feb 17, 2012 $23 strike Call Options for $1.45 yesterday and hope that a few other traders jumped on that train. Well, I know alot of Wall St. Pros are all over this big trade and yesterday was a record volume day for Options traded on DMND foods, but I hope a few Optionshoney lovers are making money on this trade as well. Forbes reports: Plunge In Diamond Foods Yields Feast Of Options Trades at Forbes(Fri 10:07AM EST). Consider locking in profits today as these DMND Options contracts are trading 61% higher over night:http://finance.yahoo.com/q?s=DMND120218C00023000. Always remember that pigs get slaughtered…no need to be greedy and it’s a very smart move to take 60% of our profits off the table on this rally in DMND shares and the Call Options…But, this stock may run to 28 by the Feb 17th expiration next week and we could still see huge upside in the value of these Call Options contracts. Options are risky financial instruments and please consult your investment advisor before buying any Options contracts or stocks that I research/trade on this site.  Stay tuned for more action at Optionshoney.com.

Check out the 2 day chart on DMND courtesy of Fidelity Investments:

Chart

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

OptionsHoney on Fire!! Call Options on Visa and KKR Financial Holdings Ahead Of Earnings?! By: Tim Bolger

It has been an amazing few weeks for everyone reading Optionshoney.com and jumping in on some of my Options plays!!  I hope everyone is both enjoying my posts and making lots of honey ( i mean money) on my investment research and Options plays.  GNW, GS,  AAWW, POT, DANG, AVL, HL, etc have all been huge winners in 2012 and I have never been more focused in my entire life on hitting home runs…  My 4-5 years of following a majority of the stocks that I am designing Options trades on is starting to pay off tenfold.  I conduct rigorous fundamental research analysis on all of these companies that I post on and I follow the technicals closely as well… GNW and GS being the biggest returns thus far in 2012…

What is my Options play now?! I love Visa and KKR Financial Holdings ahead of earnings.  Both companies are headquartered in the San Francisco Bay Area and that is a place I call home…After Mastercard smashed earnings estimates this past week, I am long the $110 and $115 strike Feb Call Options on Visa(V). Attached is the Feb 17, 2012 Options Chain on V Call/Put Options courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=V+Options.  If V blows past estimates on Feb 8, 2012 and investors pile into shares, this could be a massive Options trade!!! More positive V news at: Visa Tops One M Chip Cards In The U.S.
DJ Realtime News – 8:00 AM ET 02/06/2012.

I am also long KKR Financial(KFN)  into earnings after the bell today. Check out the company at:   http://www.kkrfinancial.com. I own the April 2012 KFN $10 strike Call Options for a nickel and the April 2012 KFN $9 strike Call Options for .25 cents.  Here is the Options Chain for the April 2012 Call/Put Options on KFN courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=KFN&m=2012-04. KFN is rallying a few percent today ahead of earnings and I am looking for this stock to break out to the upside on a good earnings report after the bell today.  KFN is trading at $9.22 right now and is up 21 cents on a negative day across all the major U.S. stock indexes. KFN is headquartered in lovely San Francisco and is poised to pop.  KFN has a trailing P/E of 5.1 and pays an 8% dividend.  Yes, this is a great value stock and pays an awesome dividend. I think this stock could easily trade to $17-20 dollars in a couple of years.  Go KFN Bulls…and who doesn’t love getting paid an 8% return on your money, while you wait for appreciation in this stock?!!

A profile on KFN courtesy of Yahoo finance:  KKR Financial Holdings LLC, together with its subsidiaries, operates as a specialty finance company with expertise in a range of asset classes. It primarily invests in financial assets, such as below investment grade corporate debt, including senior secured and unsecured loans, mezzanine loans, high yield corporate bonds, and distressed and stressed debt securities; marketable equity securities; and private equity. The company also invests in other asset classes, including natural resources and real estate. Its corporate debt investments are held in collateralized loan obligation (CLO) transactions that the company uses as long term financing for these investments. The senior secured notes issued by the CLO transactions are owned by unaffiliated third party investors and the company owns the majority of the mezzanine and subordinated notes in the CLO transactions. KKR Financial Advisors LLC serves as the manager of the company. KKR Financial Holdings LLC was founded in 2004 and is based in San Francisco, California.   Check out the ten day technical chart courtesy of Fidelity Investments on V and KFN below:

Chart

Larry Ellison and The Global Enterprise Software Giant: Oracle Corporation!! What is the Options Play Honey? By: Tim Bolger

Oracle (Orcl) is one of the most powerful software companies on the planet and we all know the man behind the helm who has been most influential in taking this business software powerhouse to where it is today…Yes, that remarkable man is billionaire Larry Ellison (Co-Founder and Ceo of Oracle) and a business legend (In 2011, Forbes ranked Ellison as the 5th richest man in the world) that I admire for his brilliance, innovation, and competitive nature.  Ellison has built one of the most successful Technology companies in the world and he has a continual hunger to get larger, more powerful, and more profitable all the time.  Oracle’s Ellison has spent over $40 billion in the last decade acquiring and gobbling up both competitors and smaller companies to add to the stellar suite of Oracle companies and software products.  Currently, Ellison is attempting a hostile takeover of Peoplesoft and is always mining for additional acquisition targets that he sees fit for Oracle’s continued growth and gaining a competitive advantage in the marketplace.

Ellison is not only extremely competitive in the business world, but in “all other walks of life,” such as his love for racing sail boats. Ellison and his team were the recent winners of the America’s cup and brought the cup back to his hometown yahting club in lovely San Francisco.   Competitive sailing, just like running one of most successful technology companies in the world, is a way of life for this Tech mogul.  Ellison is determined to win the next America’s Cup being raced in San Francisco…To attempt achieving this goal, he built a custom $100 Million sailboat.  Yes, he built a pretty nice boat by all standards.  And, he likes to win and win alot…winning makes him and other powerful players alike feel good and he loves the adrenaline rush. After all, when you have over $30 Billion, you can buy whatever you want on earth(he owns fighter planes, helicopters, the second largest yacht in the world(The Rising Sun and is 452 ft 8 inches), sports cars, several gorgeous estates/mansions around the world, a beautiful place on San Francisco’s Billionaire’s row, etc.) and it is more the game of continual winning than needing any more cash…But, who can blame the guy if he wants to surpass Mexico billonaire Carlos Slim‘s wealth someday and be worth $80 billion someday.  I definitely know that if he more than doubles his current wealth in his lifetime, that will be very good for both long term Oracle shareholders and Ellison’s personal Oracle fortune (Ellison is by far the largest Oracle shareholder, with a majority of his wealth held in the company’s shares).  As of Jan 5, 2011 Ellison owned over 1.1 billion Oracle Shares. Wow!! It is always important to know how large the stakes of insiders are and the institutions that own the shares of the companies that we might invest in.  I especially like to see when a founder, such as Ellison has a majority of his wealth on the shares. It is usually a bullish signal for longer term investors and means that Ellison feels the best investment is investing in himself(the quarterback) and the future of his company Oracle…

Say Hello to Larry Ellison’s Private Mega Yacht the “Rising Sun”:

Rising Sun

Courtesy of:  http://www.wirecyber.com/2009/04/18/world-class-luxury-cruise/

One of Ellison’s favorite quotes was by Genghis Khan: “It is not sufficient that I suceed – all others must fail.” That is clearly a quote that Ellison has lived his life by and this business mogul continues to divide and conquer to achieve his personal goals and business goals for Oracle shareholders.  Personally, I have been monitoring Oracle’s stock for over 3 years and think there is definitely great upside potential in the stock and equity options for Oracle investors.

The opportunity for our Options play just got even better for us in Dec 2o11.  Oracle’s stock plunged 10% on high volume(over 180 million shares traded hands) after missing Wall St. analysts top line revenue forecasts in its latest quarterly earnings report in Dec 2011.  I believe the revenue miss and share pullback was just a temporary bump in the road for Oracle shareholders and presents longer term investors with a great opportunity to add to their core position in the shares.  So let’s look at the Options alternatives here:

Options Trade#1:  I like selling the Orcl Mar 16 2012 25 Put Options for .75 cents.  Keep in mind that the ask right now on these contracts is .51(the ask is what a seller is willing to sell them for currently) and a bid of .49, so we need the stock to decline 4-5% in order to get the Put options to a level at which I am looking to sell them to collect the options premium. As I will continue to educate on Optionshoney.com, selling or buying Options at the current Market price is often not a good idea and we need to be patient for the best time to make our trade.  If the Put Options increase to .75 cents and I were to hypothetically sell 20 contracts, I would receive a credit of $1,500 to my brokerage account.  I love Oracle shares for the long term and I am comfortable getting long the stock at 25, if I get exercised on the shares. I will get exercised only if Oracle shares are trading below $25 at Mar 16, 2012 expiration.  If I wanted to place this trade, I would first need $50,000 in cash in my account as collateral in case I get exercised($25 share price x100 shares per options contract=$2,500, so if I get exercised on 20 contracts, that equals 20 x $2,500=$50,000). I like this trade, because I think the recent big sell off in Oracle shares was overdone to the downside as a result of a weaker Dec 2011 quarterly report than Analysts had forecasted. I believe Orcl shares will trend higher or sideways over the next few months and anticipate a stock price close higher than $25 by the March expiration of the contracts. If I get exercised on the shares, selling the 20 Put contracts will reduce my gross purchase cost of 2,000 Orcl shares at $25 per share from $50,000 to $48,500($50,000-$1,500 premium collected for selling the 25 strike Put Options).  If Orcl shares trade to 40 in the next 18 months and I get exercised on the Orcl puts I might sell, this trade hypothetically costing me $48,500 will be worth $80,000 at 40 a share.  I would be very happy with those potential returns and believe Oracle is well positioned in the global Technology arena to continue its growth and profitability.  Of course, Options are very risky and I do not have a crystal ball as to the future of the markets or any outcome of my hypothetical Options trades, so please make sure to consult your financial advisor before buying/selling any options or making any stock investments. The Optionshoney.com  disclaimer.

Options Trade#2:  If I were to make a more bullish longer term bet on Oracle shares, I would think about purchasing the Orcl Jan 18, 2013 30 Call Options for $1.65 on a pullback in the current levels of Oracle stock. Oracle closed Friday at $27.34 and the ask on these Jan 13 contracts was $2.44.  Remember timing and patience is key to setting up the perfect options trade.  We need Orcl stock to decline from current levels to around $25 to be able to purchase the Call options for my desired price…The beauty of this trade is that I do not need any money as collateral to purchase the shares and just need the money to purchase the Call Options. As I demonstrated in Options Trade#1, we needed tens of thousands of dollars in collateral to execute the trade.  In options trade#2, my total financial risk is that the contracts could expire worthless at expiration and I would lose $1,650 plus trading fees. So, If I were to purchase 10 contracts at $1.65, it would cost me 1.65 x 100 shares per contract=$165. $165 x10 contracts=$1,650 plus trading fees.  For $1,650 plus fees an Orcl bull can get long exposure to 1,000 shares of stock at an exercise price of 30 and we have almost a year for the shares to rise. If Orcl runs to 40 in the next 12 months, our $1,650 trade will be worth over $10,000. Well, that would be excellent in a perfect world and be over a 600% return on our initial $1,650 invested in the Call Options…The beauty here is that we only risked $1,650 to potentially make $10,000.  Now let’s put the actual cost of purchasing 1,000 shares of Oracle stock, which have no expiration date in perspective. For us to purchase 1,000 shares today, it would cost us $27,340 plus trading fees.  This is an example of how Call Options can give you great leverage for only a small fraction of the cost of purchasing the actual stock to get in the game!!! Optionshoney disclaimer.  Check out the five year chart on Oracle Corp below, courtesy of YahooFinance. Notice the huge volume at the bottom of the chart on Oracle’s recent quarterly earnings report. Till next time.    —Timmy B

Chart forOracle Corporation (ORCL)

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