Category Archives: Stock Trading

HOW I SCREWED UP BCEI

BONANZA CREEK ENERGY (BCEI)

Ok, I’m always on the look out for new companies and beaten down stocks. I was using my handy-dandy scanner the other day and came across Bonanza Creek Energy Unfortunately, we could not get stock quote bcei this time.. I forget which criteria was flagged, but it was either percentage move during the session or moving average crossover. Regardless, I started doing some homework.

Turns out that BCEI is the epitome of beaten down. Yet another Oil & Gas Exploration company destroyed by the price of crude. Based in Denver, CO, this stock once traded near $63.00 per share back in 2014. Yeah, $63.00 per share!! I began reading SEC filings and earnings reports and they were in a significant amount of debt (still are but doing better) and now they’re missing interest payments, but 2017 may bring better luck. If WTI can remain above $50.00 per barrel then maybe, just maybe, BCEI can crawl out of the darkness.

Let’s face it…they’ve made it this far right? If they were going to go bankrupt they had plenty of opportunities during 2016 to throw in the towel. This is truly a gamble or speculation trade – buyer beware.

THEN CAME FRIDAY

Last Friday wasn’t my best day mainly due to the fact I was exhausted from a very long and volatile trading week. I had just cashed out of my Denbury Resources Unfortunately, we could not get stock quote dnr this time. position and knew I wanted in on BCEI. I pulled the trigger at $1.25 per share while it was heading North and I was convinced it was going higher. Then it turned around…

Ultimately, I was right, I was just a day too soon. On Friday, I purchased 5000 shares @ $1.25 and sold them @ $1.16 at the closing bell. I hate to lose money. I mean it makes me physically ill, but I was so far up for the week I didn’t really consider it that big a deal so I killed the trade. For whatever reason I just wanted out for the weekend. Yeah, that turned out to be a horrible thing to do. Ok, ok, I’ll just say it…that was f**** stupid.

BCEI opened today at $1.19 per share and slowly climbed all the way to a high of $1.58 settling more than 30% up from Friday’s close @ $1.37 per share at the closing bell. I watched all day in horror as it continued to climb. I thought about buying at $1.37 around lunch and decided against it.

WARNING!!

I am noticing something interesting in WTI Crude – it’s going down today! This is why I did not pull the trigger. I’m thinking we could see a sell off towards the end of this week or next before the Christmas holiday and before the end of the year as everyone takes profits. I’ll be patient this time and watch what happens.

NEVER LOOK BACK

I’m trying hard these days to let the mistakes go and concentrate on the future, but this one really pissed me off. I was right, I had it at a good price and I know it’s going higher. Sure, it’s high risk, but I knew that too and went in with my eyes wide open.

This is a prime example of how a seasoned trader can still make mistakes. I have learned several lessons in my trading career, but below are the top three (3):

1) BUY when stocks are going down and SELL when they’re going up

2) NEVER violate your original cost basis or close a position profitable, watch it continue higher and get back in thinking you’re going to keep making money. This is a really dumb move, but very easy to do.

3) NEVER look back or sit around debating what you should have done or what would have happened. It’s over. Move on. Realize that every day – literally every day – creates new opportunities to make money in the market. Stay calm, don’t be so hard on yourself and LET IT GO!

THE BOTTOM LINE

Yeah, I lost $500.00 roughly on Friday. I then lost another $1,500.00 in position gain today. That’s $2,000.00 total I’m down because I was a complete idiot. It happens…

The cool part is I bought Amazon today which made me a cool $1,000.00 and sold my Nvidia March 65 Call’s at 15% profit or $560.00 gain. I basically made what I would have on BCEI and that my friends…is the point!

THURSDAY, OCTOBER 27, 2016

stocksTHURSDAY TRADING

What a day! It was up, then down, then back up, then back down. My head was spinning by the closing bell! What did I do? What did I buy? I watched for most of the morning, but ultimately decided to stay away from most trades. I did buy Twitter and double down on my Starbucks call’s. That was it. Below are my current holdings with a little update for each.

denburyDENBURY RESOURCES

Unfortunately, we could not get stock quote dnr this time.

Currently, this is my largest holding. I believe a couple of things will happen over the next six (6) months: crude oil is going higher and Denbury will go higher with it. Denbury has always traded with crude and that hasn’t changed.

Today I broke even twice, but it just couldn’t push past the $2.78 per share price. I was really hoping for $2.82 and had a pending limit order to sell 6,500 shares @ $2.82. I knew it would probably go back down before the close and I was right. Unfortunately, it never got to my sale price – bummer.

Here are my Denbury holdings as of right now:

  1. Actual stock shares: 26,500 @ $2.78 cost basis
  2. Sold 10 contracts NOV 3.5 PUT’s @ $0.60 per contract making my break even $2.90 if exercised the third week of November. I’m wiling to take the shares and I’m not too concerned about this. It will raise my cost basis on my actual shares, but no big deal. If it goes profitable I’ll probably buy them back to close.
  3. Sold 25 contracts NOV 4 PUT’s @ $1.024 per contract making my break even $2.976 if exercised the third week of November. I’m willing to take the shares and I’m not too concerned about this. It will also raise my cost basis on my actual shares, but no big deal. If it goes profitable I’ll probably buy them back to close.

If you will notice I have 3500 shares as the seller (writer) of PUT contracts for November. This is why I currently own 26,500 shares. I am anticipating being PUT the 3500 shares the third Friday of November making my total share count 30,000. I am also expecting a good earnings report next Thursday and I am holding everything through earnings – risky, but could be wildly profitable.

Starbucks STARBUCKS

Unfortunately, we could not get stock quote sbux this time.

If you have read my blog you know that the primary reason I am down this year is because of Starbucks. Does this mean I never come back and try again? Hell no. The May / June Starbucks debacle was not the fault of Starbucks. Let’s be honest, it was my stupidity. Never, ever, ever, buy a short expiration call option on a stock that just reported earnings and started heading down. I mean how stupid can you be right? I lost a ton of cash thinking Starbucks would jump right back (as it always had) and boy was I wrong.

Currently, I own twenty (20) contracts of the JAN 50 CALL. Yeah, look at that. First, it’s a January call so I have three (3) more months before it expires. Second, it’s a $50.00 strike call so it’s DITM (Deep-In-The-Money) and my break even is $54.38 per share. Do I believe Starbucks will be higher by a dollar in three (3) months? Yes I do. Winter is coming. Christmas is coming and everybody loves Coffee! Totally different trade than in May / June.

I was actually up several hundred dollars at lunch today, but did not sell it. I intend on keeping for at least a week. They report earnings next Thursday as well and I do not believe I’m going to hold through earnings. Just too damn risky given the state of the restaurant industry right now. I’ll probably seriously regret dumping it.

twitterTWITTER

Unfortunately, we could not get stock quote twtr this time.

You can read my previous Twitter post earlier today, but I went ahead and picked up 1000 shares @ $17.75. If it doesn’t act right tomorrow (Friday) I’m dumping it (loss or not) and waiting to see if it dips to $15.00 and picking it back up. I have a feeling tomorrow morning will be very important with regard to which direction it wants to move.

THE BOTTOM LINE

Most of my trading portfolio is in one basket. I realize that. However, I’ve been watching Denbury Resources for more than a year now and I believe the bottom has been hit with the oil & gas industry and I am not alone in that belief. I believe if a company is paying off debt while oil is in the mid-40’s it is doing ok. I also believe if they didn’t go bankrupt in February, they’re going to be ok. Buy DNR and in a year or two you’ll be glad you did.

DAYS LIKE THIS SUCK

mondayBORING MONDAY!

Monday, August 1, 2016, will go down in history as extremely boring. Yes, oil went down. Yes, oil related equities got hammered as usual. Yes, everyone believes oil will hit $35.00 per barrel again before stabilizing. We have heard it all over and over again. It’s days like this that you must have confidence in yourself, your beliefs and really the world around you. I, having lost all hope in humanity, do find days like today difficult. Do you stay in the market? Do you liquidate into cash and walk away for a month? Do you buy everything in sight? Who knows! What I do know is that I am confident in my ability to detect the future. It has paid well numerous times and the market wants to go higher.

WHAT IS THE FUTURE?

The future is higher oil prices if the demand is truly going to increase gradually throughout 2016 and 2017. If we’re all being fed a bunch of bs regarding demand we are all very much in trouble. If inventories are correct, production levels continue to decrease, demand increases, blah, blah, blah…then it is inevitable oil prices will move higher and stabilize. I’m not even worried about the glut in gasoline. The demand was there and normal, we are just extremely oversupplied. The average American traveler did not disappear, we just made too much trying to make up losses from oil. Makes sense to me. Pump that gasoline as hard as you can and let’s try to make some money elsewhere for a change. That backfired too didn’t it??

MY PERSONAL BELIEF

I believe in the next twenty-forty years oil will decline in price and overall demand. It seems logical to me that alternative fuels and cleaner options will come along and decrease the worlds dependency on oil. Hell, it might even happen before my time on Earth expires, but I’m not holding my breathe. I just don’t see oil being all that it is today forever. For now, I plan to ride the wave.

BACK TO THE FUTURE
(Doc Brown would be proud)

With the surplus of crude filling everything from huge storage containers, super-tankers and milk jugs all over the world, the demand for transporting and storing crude oil and other petroleum products will do nothing but increase in the short-term (six to twelve months). Oil tanker companies such as Nordic American Tanker Unfortunately, we could not get stock quote nat this time. will benefit from such activities and I believe we are about to hear just that on the 8th of August when NAT releases their latest earnings report.

Oil service companies such as Denbury Resources Unfortunately, we could not get stock quote dnr this time. will benefit from higher oil prices, but you must be able to see the big and far out picture. It’s not going to happen tomorrow. It’s not going to happen by Christmas. It may not even happen before 2018, but it will happen. The goal is to research and choose those companies with the best balance sheets, lowest debt and highest probability of success long-term. Pick the companies most likely to make it to the other side…

YES, TODAY WAS TERRIBLE

Monday’s suck, but today was like watching paint dry. You can tell the bulls are getting anxious, and no one is really doing anything major. We all remember August 2015 and I can feel that the market is being very cautious…what I wouldn’t give for some damn volatility!

THINGS I’M WATCHING THIS WEEK

Facebook Unfortunately, we could not get stock quote fb this time. – I hold two (2) DEC 110 CALL option contracts with an average trade price of $18.625. I did buy these a little early, and I’m waiting for a larger pullback to around $120-$121 per share to buy more. If it continues higher in the coming weeks I plan to eject at my normal 20% gain.

US Dollar Index Futures (SEP 16) – I watch the dollar carefully and it did move higher today by 0.29%. A higher dollar means lower crude prices.

Amazon Unfortunately, we could not get stock quote amzn this time. – I closed all positions after earnings and I’m awaiting another entry point (pullback) and will be buying ATM call options for DEC 2016.

McDonalds Unfortunately, we could not get stock quote mcd this time. – Luckily I exited all positions before they reported earnings snapping up a nice profit. I’ve been watching it hover around $118.00 now for two days and I’m waiting on another entry point. I was hoping it would get to the $110 ish range. I plan to buy ITM call options for DEC 2016.

Kroger Unfortunately, we could not get stock quote kr this time. – I’ve been watching Kroger very close and it has been hovering around $34.00 per share now for a couple of days. If it holds $34.00 I may be a buyer of DITM call options four (4) to six (6) months out.

Twitter Unfortunately, we could not get stock quote twtr this time. – Yes, Twitter. I believe Twitter is going to get purchased and if they don’t they will get their shit together and go higher. I am a recent new user for Twitter having finally succumbed and I feel it is the best place for real-time news. This has got to be worth more than $16.00 per share! I plan to buy ITM call options four (4) to six (6) months out if it dips below $15.00 again.

Energy Select Sector SPDR (ETF) Unfortunately, we could not get stock quote xle this time. – If and when oil hits $35.00 per barrel I would be a buyer of the XLE ATM call options four (4) to six (6) months out.

DENBURY RESOURCES (DNR) TRADE

denburyDENBURY RESOURCES

Here is how I plan on trading Denbury Resources Unfortunately, we could not get stock quote dnr this time. moving forward. I believe DNR is headed higher over the next few years. It may take until 2018, but it will move higher as crude oil recovers – which it will. However, currently I’m hesitant to allocate too much cash to the cause. and I’m worried about earnings this week (before the market opens on Thursday, August 4, 2016). I’m also worried about the continued decrease in oil prices over the next few months.

SO WHAT DO I DO?

Well, I currently hold many DNR positions including 2000 shares of stock, 10 contracts of the AUG 3 PUT (protection for stock before I bought another 1000 shares), another 10 contracts of the SEPT 2.5 CALL, another 10 contracts of the SEPT 3 CALL and yet another 10 contracts of the SEPT 4.5 PUT that I sold for a 30% premium (just in case it takes off). I’m down roughly $1800.00 on what I hold, but I consider this a long-term play and I always knew I would exercise my calls if nothing else and sit on the stock.

IS THIS THE SMARTEST TRADE?

No. In fact, I was running numbers this morning and determined if I really believe DNR is headed higher over the next few years and I do not want to be over-exposed to the market or allocate large sums of cash then my best trade is to buy long-term DITM calls for 2018.

THE TRADE

Next week I will be monitoring DNR closely. I will be looking for an exit for my call positions and plan to hold my current stock as-is. I am confident we will see a pullback after earnings, but in true earnings fashion we may see a rally before and up-to the release date. This could be a good time to exit some of my positions.

I will be buying a minimum of thirty (30) JAN 2018 3 CALL options for a total of 3000 shares worth bringing my potential total to 5000 shares. I would like to have 100 contracts (10,000 shares worth), but I’m going to patiently wait and watch throughout August and September and buy the JAN 2018 3 CALL options down if the underlying stock price continues to drop.

By making this trade I will have control of the total number of shares I really want to have (10,000), yet, it will only require a fraction of the cash allocation compared to buying actual stock. Some might say this is the entire purpose of options!

EXAMPLE

Currently the DNR JAN 2018 2 CALL (I’m using the $2.00 strike here because I know the value of the option off the top of my head, I would be more interested in the $3.00 strike to save a little money on the premium) is selling for $1.48 per contract. The break-even in January 2018 would be $3.48 ($2.00 strike plus the $1.48 we paid)and I’m damn sure the stock will be higher than that or the company will be bankrupt one of the two.

If I went ahead and purchased all 100 contracts to capture 10,000 shares worth the trade would cost $14,800.00 compared to $29,000.00 if I bought the stock outright at Friday’s closing price. I would only have half the amount of cash allocated to control the same number of shares. Sweet!

ALTERNATIVE TRADE

You could also execute a collar / synthetic (combo) scenario by selling JAN 2018 put options to help pay for buying the JAN 2018 call options.

For example: I could sell the JAN 2018 3 PUT @ $1.25 per contract for 5000 shares or 50 contracts. That would be a premium of $6,250.00. Then turn around and buy 50 contracts or 5000 shares worth of the JAN 2018 3 CALL @ 1.20 per contract costing $6,000.00. This would be a net credit of .05 cents.

Ultimately, the trade would cost us nothing and as long as the stock price is above $2.95 per share in January 2018 we are slick. The break-even on the PUT option leg alone would be $1.75 per share. I could live with that! If the stock sees a drastic move up your profit will be capped with the PUT option, but infinite with the call options.

QUESTIONS OR CONCERNS? DID I SCREW UP?

Join the site and post a reply! You can also email me by clicking here. Thanks for reading!

 

FREEPORT-MCMORAN (FCX) EARNINGS

earningsFCX TUESDAY

Not sure if you’ve noticed, but it’s a major earnings week! How exciting! Freeport-McMoRan (FCX) Unfortunately, we could not get stock quote fcx this time. is one I’ll be watching before the market opens Tuesday morning. Analysts are mixed regarding what to expect, and I am just as unsure. I thought about opening a straddle position using the AUG 12 strike, but ultimately decided against it. Instead, I bought back my current FCX SEPT 11 PUT and my JCP AUG 8.5 PUT both of which were profitable. I moved most of my portfolio into cash leaving only Denbury Resources Unfortunately, we could not get stock quote dnr this time. which is kicking my tail right now.

SO WHAT WILL FCX REPORT?

Freeport-McMoRan will be reporting its earnings for the second quarter tomorrow before the opening bell. According to NASDAQ and based on eleven (11) analysts forecasts, the overall consensus is that the company will produce a loss of $0.01 per share. This shows a massive decline from the gain of $0.14 per share realized in the same quarter last year, but strong growth from the loss of $0.16 per share realized last quarter. If they can pull off a slight loss of $0.01 per share or even better actually turn a profit per share the results will be a stock price rocketing past $13.00 per share. I personally do not want this to happen.

THE FCX TRADE

What do I want to happen? Well, I do believe FCX is going higher. That I will admit, but what I really want is for the market to snap react (as it often does) to some irrelevant remark or tidbit of information within the earnings figures and drop the stock price below $11.00 per share. I want this to happen just long enough to SELL AUG & SEPT CASH SECURED-PUTS against the stock. I might even buy some shares with a covered stock transaction.

AUGUST EXPIRATIONS
(3-5% 24 Days)

I’m looking at the $10.00 strike for both August and September. I would prefer August (of course) just for the faster ROI. Currently, the AUG 10 PUT is selling for 1.5% which is not too bad given the duration. However, if we see a massive dip right before the open then this could turn into 3-5% pretty quick. I would set multiple limit-orders just in case.

SEPTEMBER EXPIRATIONS
(5-10% 52 Days)

Again, looking at the $10.00 strike for September it is currently trading at 3.3% and could easily (with a quick dip) increase to the 5-10% range. For 52 days I would need to be in the 8-10% range to really be ok with it. The funny thing about FCX is the fact you may think it’s going to be 52 days, but if it dips hard it could recover in 24-48 hours. I’ve watched it happen many times.

COVERED STOCK (PROTECTED PUT)

If you’ve read my article on Protected Put (Married Put) transactions then you know what I’m about to say. If you haven’t I suggest you go read it now and shame on you. If FCX dips hard I would not only sell puts against it at the $10.00 (maybe $11.00) strike(s), but I would be tempted to buy 500 shares of stock and sell the SEPT 13 PUT as protection (insurance). Really, I would sell whichever strike was above the stock purchase price.

With a covered stock purchase you get both the shares of stock and the protection (buying an equivalent PUT option) all with a single transaction, single commission and your stock is protected for the duration you choose (by the PUT). It also lowers your buying power less than simply buying the stock outright. So really, I would sell puts and buy covered stock if FCX tanks below $11.00 per share. Here’s to hoping!

 

 

OPEC MEETING – DOHA, QATAR

oilARE YOU READY?

Monday is just a few days away and the Opec meeting in Doha, Qatar is looming. The market has been stagnant the past few days and has “felt” really weird. You can just feel everyone is waiting on this meeting before doing anything significant.  I feel volatility building like a balloon about to blow!

I have been preparing for high market volatility and lower oil and gas equity prices all week. I really can’t wait! I believe this will be a buying opportunity for those of us that are long-term investors in oil and gas companies that have been beat down.

Also, if oil indeed sells off (as it started to do today) on Monday and next week there will be a great buying opportunity created for ALL stocks. The entire market will be drug down if the meeting Sunday goes poorly and this will be the time to scoop up some stock you want to own long-term.

Be ready. Create your strategy Sunday. Preparation is key to success!

NEXT WEEK’S TRADE(S)?

S&P OIL & GAS INDEX Unfortunately, we could not get stock quote xop this time.

Short the XOP!! If you are late to the game don’t panic. I believe you will have a chance to short the XOP Monday and still catch excellent gains. If you are an experienced trader, like risk and want huge gains (potentially) I would be BUYING the APRIL 2016(4) 30 WEEKLY PUT expiring next Friday. Currently the OI (Open Interest) on this option is 5,141 contracts, but the volume today was 21,434! The mark was .24 cents per contract at the closing bell.

CBOE Volatility Index Unfortunately, we could not get stock quote vix this time.

I have been rather quiet the past few days because I’ve been getting acquainted with my new account balance. I funded $20,000.00 on Wednesday in preparation of my budget trader challenge starting May 1, 2016. I’ve been watching and creating my strategy. Trades I did make yesterday and today included BUYING 50 contracts of the JUNE 23 CALL option (again) on the VIX @ $1.35 and $1.30 per contract with an average trade price of $1.325 currently.

I strongly believe the VIX will go up in the near future. I was profitable roughly 5% today and could have gotten out, but I’m expecting a 20-30% gain on this trade. Volatility is coming, I guarantee it…

OPEC DOHA MEETING

I am looking very forward to Sunday and Monday to see what happens at the OPEC meeting on Sunday, and then how the market reacts on Monday. I will be creating limit orders for both selling PUT’s and buying shares of stock for Denbury Resources Unfortunately, we could not get stock quote dnr this time. as well as Vanguard Natural Resources Unfortunately, we could not get stock quote vnr this time..

More on my strategy this weekend after we see what happens Sunday. Prepare yourself! Next week may be a wild ride…

APPLE BREAKING NEWS

Apple Unfortunately, we could not get stock quote aapl this time.

appleThis is not really breaking news, but around lunch Apple released a statement stating they were reducing iPhone production due to low demand. The stock is getting slaughtered and I just want it on record that I’ve been predicting this for over a year!

I believe Apple is done and has been since Steve Jobs died. Tim Cook is, I’m sure, a great CEO, but he is not Steve Jobs and never will be. The innovation is gone and recreating the same devices over and over in different colors with better specs will carry you only so far before everyone realizes you’ve done nothing for years.

I am a user of Apple products and could not operate without my iPhone 6 Plus (mainly for trading), but let’s face it…Apple is not the powerhouse it once was. I would be short Apple or out of it entirely.

APRIL 13, 2016

WEDNESDAY, APRIL 13, 2016

batmanThe image to the left has nothing to do with today, but I couldn’t resist. We all need a little humor from time to time and while searching for a good leading image I came across this one and laughed out loud. Call me nerdy!

MOVING ON…

Global markets rallied overnight with the Shanghai Composite Index closing up 1.4% @ 3,066.64. Germany’s DAX 30 index opens 1.5% higher @ 9,904.62. The OPEC and non-OPEC member meeting scheduled for Sunday in Doha looms providing little solace for investors. Most analysts agree there will be no “bullish surprise” during or after the meeting and the average per barrel price for crude oil remains $35.00.

BREAKING NEWS

Peabody Energy Corporation Unfortunately, we could not get stock quote BTU this time.

peabodyPeabody files Bankruptcy. On Wednesday, Peabody Energy Corporation announced a majority of U.S. entities will be filing voluntary Chapter 11 protection in U.S Bankruptcy Court for the Eastern District of Missouri. Peabody does expect operations to continue in ordinary course of business and the Australian platform is not part of this filing.

Peabody’s recent liquidation attempt of their New Mexico and Colorado assets was terminated after the buyer was unable to complete the transaction. This was, more than likely, a contributing factor in their moving forward with Chapter 11 protection.

Trading of Peabody Energy Corporation shares on the NYSE is expected to be suspended immediately. Peabody Energy Corporation is a small cap coal company that received national attention in August 2015, when Billionaire investor George Soros scooped up 1 million shares. I wonder how he feels about that now or if he even still owns them?

STOCKS TO WATCH TODAY

We’ve had a good rally over the past couple of days. It was my belief that we would or will see a down day today, but from what I can tell the global markets are up and we may see continued upward movement. As of this writing (3:13 AM Wednesday) I have moved the following to the top of my watchlist for today:

Denbury Resources Unfortunately, we could not get stock quote dnr this time.

If DNR falls below $2.76 per share (my current cost basis) I plan to purchase 600 more shares of actual stock bringing my total to a nice 1000 shares. I’m doing this before the OPEC and non-OPEC member meeting this weekend just in case oil sees a bounce next week. If it does not (or better yet it crashes) I plan to SELL cash-secured PUT’s for the $2.00 strike. The goal is to own 1000 shares, and continue selling PUT’s for premium income and maybe to acquire shares at a discount if assigned.

Vanguard Natural Resources Unfortunately, we could not get stock quote vnr this time.

Same goes for VNR. I’m strategically positioning myself based on the potential outcome this weekend and next week. If VNR falls below $1.95 per share I plan to purchase another 100 shares of stock and 10 contracts of the JULY 1.5 CALL option @ .30 cents per. I currently own 100 shares of stock with a cost basis of $1.53 and 8 contracts of the JULY 1.5 CALL option @ .45 cents per. My goal is to hold 2000 shares of stock for the long-term. I also plan to SELL 50 contracts of the MAY 2 PUT for .30 – .40 cents if the underlying comes down and another 50 contracts for .50 – .60 if the underlying really comes down for a total premium of somewhere in the $4,500.00 to $5,000.00 range. If the MAY 1.5 PUT premium increases to .30 cents per contract or above, I may move to it instead. Why do I plan to purchase if VNR falls below $1.95? Because, I purchased my original JULY 1.5 CALL options for .45 cents making my cost basis (if I choose to exercise which at this rate I will) $1.95 so anything below that I’m doing better than my JULY CALL’s. Make sense?

Pandora Unfortunately, we could not get stock quote p this time.

pandoraI am made fun of for liking Pandora. I can hear all of you laughing…it’s ok. I laughed once too when it was $9.00 per share and watched it skyrocket to $40.00. Sure, that was a different time and competition is fierce, but you know what? I’m still a believer. I believe Pandora has a great product, I still use it daily and with the founder returning as CEO I believe good things are coming. Call me crazy. I am watching the stock to see if it holds the mid-8’s as I believe $8.00 per share is the support level. I would be willing to sell the MAY 7 PUT if the underlying creeps down. I would be willing to sell the MAY 8 PUT as well because I believe (raising hands in the air).

Starbucks Unfortunately, we could not get stock quote sbux this time.

StarbucksHow can you not keep your eye on Starbucks? It’s just something I do daily. I’m very interested in the JUNE 62.5 CALL option and I’ve been watching it for weeks. I’ve been courting it if you will and watched it trade from $1.44 – $1.68 per contract down to .68 Tuesday morning and back up to $1.02 by lunch. It’s been all over the board. If Starbucks sees additional pull back today and this option decreases back to .70 per contract I would be hard pressed not to pounce. They report earnings in two (2) weeks – perfect time to buy call’s and sell the day before or day of earnings. This is an easy 20% gainer.

Avalon Advanced Materials Unfortunately, we could not get stock quote avlnf this time.

Avalon is a sore subject for me. They started out as a rare earth metal mining company and rare earth miners were all the rage a few years ago (complete crap). I owned 100,000 shares of stock for a couple of years and recently (back in October) dumped them after giving up. Well, that was a poor decision given the fact the stock has doubled in the last week. It was delisted (voluntarily) at the end of last year and now trades OTC (over the counter) with the penny stocks. I do strongly believe and have always believed that Avalon will make a comeback. I envisioned 2017 being “their year” and look forward to watching it. A recent news article suggested several things that make me believe revenue is coming and could be big. I’m waiting for the dust to settle after said news article and the stock to return to .12 cents or below. I will reacquire at least 10,000 shares at that point (just in case). This time, I won’t sell…

MORE AFTER THE CLOSING BELL!

ALCOA TRADE ALERT

alcoaALCOA

This company is yet another that has always provided me a warm and fuzzy feeling for reasons unknown. I cannot explain it, but I do know that money can be made with this one. I remember not too long ago during the holidays Alcoa traded as low as $6.88 per share. Those were the days and I wish I had loaded up! Today, it is trading at a more reasonable $9.30 ish.

Alcoa Unfortunately, we could not get stock quote aa this time.

UPDATE: APRIL 11, 2016

Alcoa is currently trading at $9.26 and falling hard. Tomorrow (Tuesday) morning will be a great buying opportunity if this continues in pre-market trading before the opening. I would be a buyer anywhere below $9.00 per share!

On Monday, April 11, 2016, Alcoa will report Q1 2016 earnings and I consider Alcoa to be a high-risk, high-reward stock. I agree with Jim Cramer that purchasing AFTER they report is the best way to handle and I cannot wait until Tuesday morning to see where it lands.

If the underlying stock gets hit really hard in after hours trading on Monday I would be willing to purchase actual stock shares especially if they dipped into the $7.00 range.  

Wall Street expects, on average, for Alcoa to earn 2 cents per share on $5.14 billion in revenue, compared to a year ago when earnings were 28 cents per share on revenue of $5.82 billion. Per share profit is down, but 2017 is looking red hot!

PROJECTIONS

Alcoa is definitely a bounce-back candidate at the start of 2017 and estimates are 52 cents per share next year! This is a long way from the current 2 cents and they’re expected to deliver $22.01 billion in full-year 2017 revenue.

I believe the worst is already baked into the current Alcoa stock price and the current 12-month target consensus is $10.61 per share or a very modest 13.23% upside to Friday’s close.

WHAT I WOULD DO?

On Monday I will be watching Alcoa very closely. After the closing bell and after earnings are released I will be watching even closer. If I had the cash currently (which if you’re keeping up I liquidated Friday for the tax man) I would wait for Tuesday morning and if Alcoa sees a dip I would be buying the weakness…

If you want an option trade: I would purchase (as the buyer) the JUNE 2016 9 CALL option @ .75 cents or in that neighborhood. I would set a limit-order for .75 cents before market open Tuesday if the underlying is still getting killed.

If you’re really interested in risk: I would also buy 10 contracts BEFORE they release the report on Monday afternoon JUST in case Alcoa heads North. “Volatility crush” could hurt you on this. Regardless, come Tuesday the option premiums will be less due to the decrease in implied volatility so you are guaranteed to lose money on the JUNE CALL’s if you by them on Monday. However, if Alcoa does tank Tuesday morning I would continue buying this position down in 50 contract increments until I hit 200-300 contracts. Then wait. Worse-case Alcoa is just a hair over $9.00 in June and you exercise 20,000-30,000 shares for $180,000.00 to $270,000.00 in stock.

To hit the .75 cent per contract mark the underlying Alcoa stock will need to dip considerably and IV (implied volatility) will need to decrease, but if the underlying dips to around $8.00 or below I would start scooping up the JUNE 9 CALL for sure no matter what.

CONCLUSION

I would have zero problems owning Alcoa stock for $9.00 per share. Therefore, if Alcoa skyrockets in the coming weeks or months I would definitely exercise this option unless you don’t care to own the stock…you can just take your option gain and exit!

The worst that can happen is Alcoa tank and stay down, but I believe this is just not going to happen. I watched it during the worst market conditions in years and believe this company is going higher long-term…

 

NYSE 52-WEEK NEW HIGH / LOW

Revised April 6, 2016, 2:23 PM

COMPANY                       SYMBOL     HIGH               VOLUME
(sorry the formatting sucks will work on it)

NEW 52-WEEK HIGH

Acuity Brands                 AYI         253.97           1,182,941

AllianceBrnstn NtlMun         AFB         14.57               72,020

Altria Group                 MO         63.38           3,232,510

American Tower REIT           AMT         105.40           1,225,678

Banc of CA Dep Pfd E         BANCpE     25.93               31,016

Blackrock Invest             BKN         16.70               19,230

BlackRock Long-Term Muni     BTA         12.26             134,355

BlkRk Muni Inter Dur         MUI         14.90               51,794

BlkRk MuniAssets Fd           MUA         15.09               56,811

BlackRock Mun                 BAF         15.93               57,298

BlackRock Mun Inco           BBF         16.75               29,808

BlackRock Municipal Trust     BFK         15.46               88,717

BlackRock Mun 2030 Target     BTT         23.22               99,893

BlkRk MuniHldgs CA Qlty       MUC         16.06               89,844

BlkRk MuniHldgs               MHD         18.28               20,544

BlkRk MuniHldgs Inv           MFL         15.32             124,094

Blkrck MunHl NJ Qlty        MUJ         15.20               33,667

BlRk MuHldg NY Qlty           MHN         15.20               72,457

BlkRk MuniHldgs Qlty II       MUE         14.40             100,235

BlkRk MuniVest II             MVT         17.24               25,556

BlkRk MuniYield               MYD         15.65               66,503

BlkRk MuniYld Inv             MYF         16.34               12,246

BlRk Muyld NY Qlty           MYN         14.29               84,937

BlkRk MuniYld Qlty II         MQT         14.28              93,202

BlkRk MuniYld Quality         MQY         16.49               89,363

BlRkMunyldQltyIII             MYI         15.43             193,801

BlkRk MuniYld Ins Qlty       MFT         14.82               16,164

BlkRk NY Muni                 BQH         15.49               15,430

BlkrckNYMuni Qlty             BSE         14.38               9,303

Blackrock Strategic Muni     BSD         14.83               8,297

Boston Scientific             BSX         19.67           8,136,634

CGI Group                    GIB         48.39             132,980

Charles River Labs Intl       CRL         82.30             470,737

Church & Dwight               CHD         94.85             915,957

Constellation Brands B       STZ/B       157.17                362

Constellation Brands A       STZ         159.33           3,232,592

Deutsche Mun Income Tr       KTF         14.10               44,205

Dolby Labs A                 DLB         44.73             309,912

Dreyfus Mun Bd Infr Fd       DMB        13.37               25,056

Dreyfus Strategic Munis       LEO         9.17               143,135

Dupont Fabros Technology     DFT         41.63             385,117

Eaton Vance Mun Incm 2028     ETX         20.43               65,696

EV National Municipal Opp     EOT         22.66               74,131

Ennis                         EBF         21.50             289,333

Entergy Arkansas Bds         EAE         25.25               9,703

Fed Premier Intemediate       FPT         13.97               13,519

HnckJohn TxAdv               HTD         23.37             113,764

Heartland Payment Systems     HPY         100.97             406,578

Invesco Mun Opportunity       VMO         14.19             189,818

Invesco Municipal Trust       VKQ         13.43              172,816

Invesco PA Value Mun Incm     VPV         13.75               51,850

Invesco Qlty Mun Inco         IQI         13.32             129,047

Invesco Inv Grade Muni       VGM         14.31               99,621

Invesco Inv Grade NY Muni    VTN         15.65               39,648

Investors Real Est 7.95%     IRETpB     26.49               5,432

JHancock Pr Div               PDT         15.43             170,178

MFS Hi Inc Muni               CXE         5.39               160,905

MFS Invest Grade Muni         CXH         10.32               8,273

MSCI                         MSCI       74.93             484,540

MainStay DefinedTerm         MMD         19.98               42,314

Marine Harvest ADR           MHG         16.15              45,400

NuvAMTFreeMuniIncm           NEA         14.54             110,007

Nuveen Build Am Bd Fd         NBB         22.21             131,999

Nuveen CA Div Fnd             NAC         16.36             138,279

Nuveen Connecticut Prem     NTC         13.42               27,064

Nuveen Div Fnd               NAD         15.10             116,160

NuvGA2                       NKG         14.31               5,511

Nuveen Intermed Dur Mun       NID         13.55               57,032

Nuveen Invest Qual Muni       NQM         16.15               33,596

Nuveen MD Premium Income     NMY         13.65               57,359

Nuveen MI Quality Income     NUM         14.46               13,214

Nuveen Minnesota Mun Incm     NMS         16.18                1,048

Nuveen Muni Advantage Fd     NMA         14.56             120,569

Nuveen Muni Mkt Opp           NMO         14.49             101,578

Nuveen NJ Div                 NXJ         14.38             119,546

NuvAMTFreeMuniIncm           NRK        13.67             163,051

Nuveen NY Div Fnd             NAN         15.08               51,813

Nuveen Insured NY Select     NXN         14.69               13,498

Nuveen NC Premium Income     NNC         13.99               22,977

Nuveen Ohio Qual Income       NUO         15.88               20,858

Nuveen Pa Investment Qual     NQP         14.64               46,860

Nuveen Performance Plus       NPP         15.95             105,924

Nuveen Premier Muni Inc       NPF         14.39               75,043

Nuveen Prem Inco Muni 2       NPM         15.02             163,514

Nuveen Quality Income         NQU         15.01             105,190

Nuveen Quality Muni Fund     NQI         14.36             107,350

Nuveen Select Quality         NQS         14.87             104,512

Nuveen Sel 3                 NXR         15.05               28,480

Nuveen Sel TF                 NXQ         14.33               10,135

Owens Corning                 OC         49.69             921,739

PIMCO California Muni        PCQ         16.71               48,539

PIMCO California Mun II       PCK         11.00             106,978

Philip Morris Intl           PM         100.74           2,440,738

PIMCO MuniFd                 PMF         16.32               43,200

Pimco Muni Inc II             PML         13.54             326,594

PIMCO NY Fd                   PNF         13.05               15,980

PimcoNY Fd                   PYN         10.88               36,049

Prestige Brands Holdings     PBH         55.24              219,873

Putnam Tr                     PMM         7.73               96,411

Putnam Muni Opportunities     PMO         12.83             136,837

QTS Realty Trust Cl A         QTS         49.79             353,995

Realty Income                 O          63.03           1,032,169

Royal Bank of Canada PfC2     RYpT       34.00                 411

Ruckus Wireless               RKUS       13.66           5,829,523

Seritage Growth Prop Cl A     SRG         52.03             213,492

Six Flags Entertainment       SIX         59.03             609,037

Sunstone Hotel Inv Pfd E     SHOpE       27.08               11,992

Thermo Fisher Scientific     TMO         145.00           1,057,833

Wstrn Asset Mngd Muni         MMU         15.19               74,173

Wstrn Asset Muni Ptnrs Fd     MNP         17.06               52,108

Xinyuan Real Estate ADR       XIN         4.86               413,592

NEW 52-WEEK LOW

Calgon Carbon                 CCC         13.32             311,043

Greenhill                     GHL         18.91             527,722

HSBC Holdings ADR             HSBC       29.33           2,227,982

Harte-Hanks                   HHS         2.35               202,751

Heritage Insurance           HRTG       14.34             169,232

Jernigan Capital             JCAP       11.83             429,705

Royal Bk of Scotland ADR     RBS         5.86              747,138

EW Scripps Co                 SSP         14.70             404,676

STMicroelectronics           STM         5.11               742,744

Trecora Resources             TREC       8.17               117,444

Xerium Technologies           XRM        4.70               171,783

CASE STUDY – FCX

Good Morning Everyone!

Briefly, before the market open I wanted to take a second and provide details on a trade I made with Freeport-McMoran Unfortunately, we could not get stock quote fcx this time..

The life of this trade and how I have ended up is exactly what could and sometimes should happen as the seller of a cash-secured put.

On Monday, March 28, 2016 (just a week ago today) I SOLD 100 contracts of the APRIL 2016(1) 10 WEEKLY PUT @ .25 per for a total premium of $2,500.00. This option EXPIRED on APRIL 1 because it was a weekly option.

I intended on making this premium in a single business week during a single trading week. At the time FCX was trading above $10.00 per share…I believe it was in the $10.35 range.

On Friday, April 1, 2016, the market dipped and so did FCX. It actually dipped well below $10.00 per share trading at almost $9.50 in early session. I knew I was at risk of getting exercised (assigned), but I saw an opportunity.

Here is where I, as an experienced trader and someone who is intimately familiar with FCX, made a decision to SELL an additional 100 contracts of the APRIL 2016(1) WEEKLY 10 PUT @ .34 per for a total premium of $3,400.00 bringing the combined premium for the week to $5,900.00.

I sold them the DAY of expiration knowing FCX would go back up. Yes, $5,900.00 premium for a single business week of exposure for 20,000 shares of FCX at $10.00 or $200,000.00 in collateral.

Today, Monday, April 4, 2016

I now own 20,000 shares of FCX. Why? I was assigned Saturday morning because FCX closed Friday at $9.89 per share and it did not go above my $10.00 strike in after hours trading. I now own 20,000 shares with a cost basis of $10.00 per share.

This is the “advanced” part that is sometimes hard for people to visualize. I did not make my entire premium of $5,900.00. Since the underlying stock closed below my $10.00 strike I, for the sake of this article, “lost” the difference between the $10.00 strike and the closing price of the underlying which was $9.89.  Therefore, 200 contracts (20,000 shares) x .11 cents (difference between strike and closing price) = $2,200.00.

I kept $4,700.00 of the premium upon assignment. Make sense? I didn’t lose money, I just didn’t make as much premium as I had anticipated because the underlying closed below my strike price of $10.00.

SO WHAT NOW?

When I awoke this morning not only did I have 20,000 shares with a cost basis of $10.00 per share, but FCX was UP trading at, you guessed it, $10.00 per share! How fantastic is that? I could have SOLD all 20,000 shares of stock in pre-market trading immediately and indeed made the entire $5,900.00 premium as expected.

Remember you can buy and sell stock in pre-market trading starting at 7 AM Central Time. That’s a big difference between stocks and options. You can only trade options during normal market hours.

By selling all 20,000 shares at $10.00 per share I would have gained the .11 cent difference back on the actual share price to make up my entire premium of $5,900.00. You with me? If FCX goes above $10.00 per share (my cost basis) I will make even more money and I know damn well it will – eventually. That’s why I didn’t really care about getting assigned.

You never sell cash-secured put’s against any stock you would not want to own immediately. Also, never sell a strike price you are not willing to pay for said stock. If you’re assigned you will own that stock for that strike so be careful!

CONCLUSION

I did not sell my shares and will hold them until I can make a little more money. I know FCX will be above $10.00 soon. I’ve already made $4,700.00 in premium and I now own 20,000 shares of FCX that I can keep forever if I want.

FCX does pay 2.02% dividend yield or .20 per share. That’s $4,000.00 per year in dividend income. Not too bad.