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Awesome Economic Data!! AAWW Moving Higher!!! Call Options?!! By: Tim Bolger

Keep an eye on ATSG and AAWW!! AAWW breaks above the $50 technical that I have been patiently awaiting…A better global economy is great news for both of these air cargo stocks. Go Bulls!!! Show me the Honey baby!!  I posted the other day on Options Honey suggesting that traders consider buying the AAWW Call Options ahead of the company’s upcoming Feb earnings report. Yesterday’s Options post on Optionshoney.com:  http://optionshoney.com/2012/02/02/atlas-air-worldwide-holdings-jumping-higher-trade-call-options-into-feb-13-2012-earnings/. The AAWW 52.50 strike Mar 2012 Call Options are up over 35% from yesterday’s close as AAWW surges over 4% today. ATSG is up over 5% today as well. Check out the 2 day chart below on AAWW, ATSG, and the S & P 500 courtesy of Fidelity Investments.  ATSG and AAWW are clearly outperforming the S & P 500 today and are ready to break out to the upside…Stay tuned for more exciting Options plays on Optionshoney.com…

 

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Atlas Air WorldWide Holdings Jumping Higher!! Trade Call Options into Feb 13, 2012 Earnings?!!! By: Tim Bolger

Atlas Air Worldwide Holdings(AAWW) has rallied over 25% in the past month and I think it continues to move much higher.  AAWW is a global provider of outsourced aircraft and aviation operating services. Read more on AAWW’s profile: http://finance.yahoo.com/q/pr?s=AAWW+Profile.  AAWW secured financing yesterday for the remaining delivery of six Boeing 747-8 Freighter Deliveries . That is spectacular news for investors!! Read more at Atlas Air Worldwide Completes Financing Arrangements for Remaining Six Boeing 747-8 Freighter DeliveriesBusiness Wire(Wed, Feb 1) If this stock breaks out above 50 shortly, I think it trades to the mid 60s in the next few months. Another major catalyst that might propel these shares much higher is AAWW’s earnings release on Feb 13, 2012.  A blow out quarter for AAWW and any positive 2012 guidance by securing the financing on the remaining delivery of 6 Boeing Freighter’s will be great for both shareholders of the stock and investors long Call Stock Options. AAWW  http://www.atlasair.com and it’s subsidiaries below:

What is the Options Trade on Atlas Air Worldwide Holdings(AAWW)?

Options Trade#1: For the short term trade into earnings of AAWW, I would think about purchasing the AAWW March 16, 2012 50.0 and 52.50 Strike Call Options. Attached is the March 16, 2012 expiration Put/ Call Options Chain courtesy of Yahoo Financehttp://finance.yahoo.com/q/op?s=AAWW&m=2012-03.  I would be a buyer of the $50 strike Call Options at $2.10 and the $52.50 strike Call Options at $1.25.  For $2,000, I can purchase 16 Call Option contracts on AAWW March 16,2012 $52.50 strike Call Options plus trading fees. That will give me the option to buy 1,600 AAWW shares at $52.50 a share.  If AAWW, blows out earnings this month and the stock trades to 60+ a share, this will be a very lucrative Options trade. Our $2,000 of capital invested on this Options play will be worth over $12,000 if the stock trades to $60 before expiration of the contracts. That would be awesome!! Keep in mind that if the stock closes below $52.50 at March expiration and AAWW has a bad quarterly earnings report on Feb 13, 2012, the Call Options may expire worthless. That is the high risk of Options…Hopefully, that will not be the case, but you know that you are risking the entire $2,000 plus trading fees on this Options trade.  For the more conservative longer term investor, owning the shares of AAWW stock may be a great alternative to buying the higher risk Call Options.  The growth story of AAWW’s revenue and earnings will be great over the next several years.  Good luck AAWW Bulls!! This could be a Big Money Options trade for all of you Optionshoney lovers!!

Check out the 60 day technical chart on AAWW below courtesy of Fidelity Investments:

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GNW Earnings on Feb 2, 2012! Buy Call Options and Sell Put Options on Stock Weakness Today!? By: Tim Bolger

I discussed the big run up in Genworth Financial(GNW) over the past few weeks in a previous post on Optionshoney.com.  The broader stock market indexes are all in slightly negative territory this afternoon as gold and silver continue to march higher!!! What is the play on GNW into earnings next week!? I am personally sticking with my bullish call on GNW and want to have long exposure going into earnings next week.

What is the Options play?

Options Trade#1: I would think about buying the GNW March 17, 2012 7 and 8 strike Call Options. Gnw shares are trading down around 4% today and I would be a buyer of these options at 1.08 and .50 cents a contract. I can purchase 10 contracts for a $1.08 ($1.08 x 100 shares per contract x 10 contracts=$1,080) and 20 contracts for .50 cents (.50 x 100 shares per contract x 20 contracts=$1,000) for a total cost of $2,080 plus trading fees. For a few thousand dollars, I will get long exposure to 3000 shares of GNW going into earnings next week.  That is called leverage with purchasing Call Options. Buying 3000 shares of GNW stock today would cost me close to $23,100. If they beat the street and give any positive signals about a rapid decline in mortgage defaults or a housing recovery, this trade will be very profitable. If they miss and the stock tanks, I could lose a total of $2,080 plus fees on this trade. Remember options are very risky and extremely volatile.  Please remember to consult your investment advisor before making any stock or options purchases.

Options Trade#2: I would also be a seller of the Feb 18, 2012 7 strike Put Options for .30 cents a contract. If I sell 20 contracts I will credit $600 to my brokerage account. Worst case scenario, I get exercised on the shares and I have to purchase 2000 shares of GNW at $7 for $14,000 plus fees. By selling the Put Options I will reduce the cost of buying the 2000 shares by the $600 credit to my brokerage account.  Best case scenario, they blow out earnings next week and I keep the $600 without having to buy the shares…However, my long term outlook and price target on the stock is 17, so I like owning the stock at these levels.  The book value of GNW shares is close to $28 a share…Good luck Longs!! Till next time on Optionshoney.com.

5 Year Chart on GNW courtesy of Fidelity Investments:

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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)

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.

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Source of Hecla Mining Chart: Fidelity Investments

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

–Timmy B

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