Bull or Bust

a bull's view

February 17, 2016

Today is a tale of the good, the bad and the downright ugly. Keeping with the “real” aspect of this blog I must admit I completely screwed up. How you ask? You’re probably thinking it’s all the PUTS I bought yesterday, but you’d be wrong. Today’s rally was somewhat expected. I didn’t anticipate my PUTS being profitable immediately, this is not how this works. You must have faith!

My screw up was Disney[stock_quote symbol=dis]   – again. Man, I just need to back away slowly from Disney and leave it alone for a while (like several months). It just continues to kick me while I’m down. However, it didn’t really kick me as much as it made me angry. I owned 115 contracts on the MARCH 100 CALL with a trade price of .55 cents. If you recall I purchased this on February 12, 2016, just five (5) days ago and I was in the hole a $1,000.00 at the closing bell that day. I did not buy down or really watch it that close because I knew Disney would recover. I knew it was a matter of time and we would be back in the $95-$98 range so I let it sort itself out.

Here we are a week later and the stock is performing quite nicely. What is so ugly about it?? The mark was .475 cents at close yesterday so this morning before the open I placed an auto-sell order for all 115 contracts at .65 cents per. My thought was: Disney hasn’t been moving that fast and considering it’s a March expiration I was willing to accept a $1,150.00 or 18.8% profit (before commissions) IF the underlying just happen to bounce quickly. Well, hell, it did just that. Within the first 15 minutes of trading all 115 contracts were sold. I wasn’t paying attention and heard the ding. I turned my head and yelled, “what was that” and done. All gone. So you’re wondering why ugly? I made $1,150.00 in five (5) days! It’s the unrealized gain the rest of today’s session that set me on fire. I had to sit back and watch. Helpless and feeling like an idiot. At one point this option was trading at $1.06!!! That’s $5,865.00 or 92.73% profit!! It’s ok, I’m over it…let’s never discuss it again.

So that was the ugly. The bad were the PUTS. Wow, I’m losing money like water going down a drain! By the closing bell my PUTS were down a little over five (5) grand, but this is trading. Must hold strong. Must believe.  Whew…knowing my luck (after the Fed meeting today and oil stabilizing) the market will continue up. Thankfully, all PUT options owned are April expirations so I have time. Tick, Tick…

I made the following trades today:

Alcoa [stock_quote symbol=aa] – doubled down on the APRIL $7 PUT at .20 cents per. Total is now 200 contracts for an average of .245 cents per. Currently in the hole $900.00.

Chevron [stock_quote symbol=cvx] – purchased 25 contracts for the APRIL $80 PUT for $1.97 per. This is a HUGE risk in my opinion. If oil continues to stabilize Chevron will continue to go up. However, I’ll continue to buy down until the underlying is around $92. I’ll stop at that point and hope for a dip or lose my ass one or the other!

Disney [stock_quote symbol=DIS] – sold all 115 contracts for .65 cents per as stated above. Damn it. Total profit $1,150.00. Just ugly.

Ford [stock_quote symbol=f] – Wow! Ford bounced hard and moved more than 3% in a single session. Way to go! It hasn’t moved this much in a single session in months. Of course, I bought PUTS so I’m buying down as the underlying goes up. Doubled down with another 100 contracts for the APRIL $11.75 for .45 per. Total is now 200 contracts for an average of .50 cents per. Currently in the hole $2,650.00. OUCH!

Home Depot [stock_quote symbol=hd] – doubled down on the APRIL $110 PUT at $2.20 per. Total is now 40 contracts for an average of $2.34 per. Currently in the hole $1,610.00 with auto-buy limit orders pending for $1.86 and $1.24 for 20 contracts each.

Starbucks [stock_quote symbol=sbux] – Wow! Way to go Starbucks! The APRIL $60 CALL I held performed great today! I am currently up $6,379.00 on 150 contracts. I did not sell today, but have an auto-sell limit order placed at $1.50 per. Currently trading at $1.29. I also purchased 25 contracts of the APRIL $55 PUT for $1.45 per with auto-buy limit orders placed for $1.30 and $1.15 for 25 contracts each. Currently in the hole $100.00.

In the end, with all the gains and losses I remained up $629.00 for the day. I still own GE [stock_quote symbol=ge] as well. The good was definitely Starbucks. I have made more money on Starbucks than anyone could imagine. It is a great stock to trade regularly and I love me some latte’s.

Until tomorrow….

The Mark

Many rookie traders fall into the bid / ask trap. It’s normal and I fault no one for doing it. I did it myself in the beginning. You think the bid / ask is the end all price and there are rules with trading. First rule: there are NO rules!

Consider the bid / ask price a “guideline” to what a particular stock or option is worth at that moment in time. You must understand – everything changes constantly. The bid / ask is fluctuating and you, as an active trader, should NEVER accept the stated price without question. What’s the first rule of litigation? Never accept the first offer. Same applies with trading…

Therefore, as an active trader you should become familiar with the “mark” or current market price. This is very important and can save (and make) you a great deal of money depending on the spread.

For example: a few months ago I purchased a Ford CALL option that was trading at a bid of $1.23 and an ask of $1.48. A rookie may have paid $1.48 because, well, that was the ask and that’s what you’re supposed to pay! WRONG! I paid $1.28 because when I placed my order I set a limit at where the current “mark” was trading. You can see with this example, depending on the spread and the number of contracts you’re buying this could mean the different between immediately being in the hole $500.00 instead of $2500.00 (if purchasing 100 contracts). This also makes it much easier to buy down your cost basis and be profitable on the next bounce. I did just that with this option buying more at $1.15 and selling everything at $1.43 a week later as the underlying fluctuated. Profitable. Would it had been profitable had I paid the original $1.48 ask? Maybe. Depending on how many contracts I purchased at $1.15 and how low my cost basis became. The point is: the lower your initial cost basis the better – always.

Sometimes (there is always a sometimes) it is ok to pay the asking price. If you’re dying to catch a rally for example and you’re behind. Chasing a stock or option is not something I recommend, but there are rare cases when it can be profitable – Netflix comes to mind. If the underlying stock price or the option prices are moving too quickly and you want out (or in) immediately. I have selected “market” many times when an option is going higher very quickly and I want to sell. This way I get the best price possible upon execution and I’m not leaving money on the table because it took me three (3) minutes to execute.

In the end, I have seen rookie traders throw away money too many times by simply paying too much or thinking they must pay the ask. Again, prices fluctuate constantly and I will often enter an unreasonable price (at the time) and let it ride ultimately seeing it executed later in the day or week. These trades are often my most profitable…when I chose a price I was comfortable paying, stuck to my guns and waited.

It pays to be patient and know the mark…

 

Brokerage Firms

I have had accounts with Fidelity, E*TRADE, Scotttrade and TD Ameritrade over the years. My first account was wayyy back in the late 90’s with E*TRADE and I honestly cannot remember what that was even like. I’m sure it was miserable given the bandwidth and status of the Internet back then.

I started with TD Ameritrade personally a couple of years ago. I wanted to play around and figure out whether or not I liked it. After a year I was in love with the mobile app and decided to open a business margin account to store funds for my primary company on a temporary and long-term basis and allow the ability to trade stocks and options regularly. The desktop and mobile applications offered by TD Ameritrade, in my opinion, are truly second to none. I use the iPhone app primarily and constantly. It’s easy to use, easy to understand and offers just about everything possible with the desktop / web based portal, but in the palm of your hand. I did upgrade to the iPhone 6 Plus just to trade and the larger screen makes the TD mobile app truly shine. I would not attempt this any other way.

I also utilize the thinkorswim platform daily for both trading with live (real) money and playing with the paper money accounts. This application, really more a tool than application, is the only way to learn how to trade without risk. At first it may look intimidating, but that’s good. You want to be intimidated because later when you actually understand what is going on you will feel that much better. I use it for research, analyzing, watching options and volume, news, real time data in general. There is an enormous amount of information within thinkorswim and I strongly recommend leveraging it.

With all that said, I do still use the TD Ameritrade iPhone app to execute transactions. Sometimes I will use thinkorswim, but I have found it easier and faster to use the regular iPhone app. I do watch the “mark” or market price on thinkorswim while using the iPhone app to execute. The mark is a little easier to see and understand on the thinkorswim platform and is crucial for getting the best price. In other words, while actively trading I am using both in real-time.

TD Ameritrade is not the cheapest. However, I believe the user interface and mobile apps are far superior and worth the additional fees. Download and install thinkorswim today. Learn how to use it. Get comfortable with it. It really helped me in the beginning and a paper money account will get your heart pumping just as much as the real money account. Trust me. I sometimes laugh that I still get nervous when buying and selling with paper money because I treat it very seriously. I trade paper money just as I would real money, if you don’t, you will never learn why you do stupid things and where your weaknesses reside.

There is a thinkorswim mobile app, however, if you think it’s complicated as a desktop application you do not need to try it on a mobile platform! It’s pretty insane. Again, I do watch the thinkorswim mobile app for certain data while using the standard TD Ameritrade mobile app to execute. Warning: the thinkorswim mobile app uses a significant amount of data and can cause overage fees to be applied. We kept getting hit with data usage fees and I finally realized it was the thinkorswim app being left open in the background on my iPhone all the time.

February 16, 2016

Great day on the market! I hope everyone made money today!This is what I like to call a “sell day”. However, I held my long-term stocks and didn’t do much but watch and enjoy being up in my primary portfolio. Sometimes it’s good to take a break and enjoy the fact you’re up more in a week than most money managers are in a year (with what I purchased last week).

On the contrary: my trading portfolio has been liquidated as of 2:30 PM Central. I sold almost everything: Ford [stock_quote symbol=F], Home Depot [stock_quote symbol=HD], McDonald’s [stock_quote symbol=MCD], Starbucks (stock) [stock_quote symbol=SBUX] and even my beloved Nordic American Tanker [stock_quote symbol=NAT]. I kept GE (stock) [stock_quote symbol=GE] and Starbucks (option) because I feel both can go higher sooner rather than later. If they don’t and they dip I’ll just buy more.

Clarification: I sold the Starbucks stock because it was acting weird and I got one of my “tingles” up the back of my neck. It attempted $57.00 this morning and even when the market was going up it did not find support at this level and floundered all day ultimately going back down to near $56. This could have been nothing more than consolidation before continuing upward, but considering where I purchased the stock I was up a significant amount and decided to take my profit. Simple as that. This is why you have a trading portfolio and a primary.

If you’re keeping up…I have held my Starbucks APRIL 60 CALL option for a while now. It is getting old and if the underlying doesn’t move soon I’ll be forced to sell. The option was up $3,200.00 this morning, about 10 minutes into the session, but I held and looking back that was probably a mistake. The implied volatility went through the roof at the opening bell because the market in general was headed up after a long weekend. Once the IV settled the prices came down and I should have captured that IV spike.  Again, this is my trading portfolio…I still hold all the above in my primary long-term portfolio.

So, what am I buying here at the close of a great session you ask?  PUTS! I’m going out on a limb and taking the downside exit. We just don’t know what tomorrow will bring so I’m betting we have another down day soon. Therefore, I made the following trades:

Alcoa [stock_quote symbol=AA] – purchased 100 contracts for the APRIL 16 $7 PUT at .29 cents per. So far, I’m in the hole $200.00.

Ford [stock_quote symbol=F] – purchased 100 contracts for the APRIL 16 $11.75 PUT at .55 cents per. So far, I’m positive by $50.00.

Home Depot [stock_quote symbol=HD] – purchased 20 contracts for the APRIL 16 $110 PUT at $2.49 per. This one, in my opinion, is the real risk. HD will either continue going back to $125-$130 as I predicted weeks ago, or it will head back to $117-$116 on the next down day. That’s my strategy…catch a dip, get out with a profit and buy the $125-$130 CALL and ride it back up. So far, I’m negative by $70.00.

Buying PUTS today might not be the best idea, but in the end if everything keeps going up I’ll just keep buying down my cost basis. This is the risk of option trading – hold them too long, keep buying down and the market goes against you. There comes a time you could end up really screwed…so be careful!

Deal of the Month

Nordic American Tanker [stock_quote symbol=nat]

I have mentioned this stock many times in recent posts, but I am just shocked at what a deal this has really been. Yes, some of the gain today is obvious short covering due to 18% of the float (as of Jan 31st) being short. I have no doubt with the talks of oil production levels, oil stabilization and other rumors flying around that those negative bear bastards are getting nervous and taking some profits.

Finally!

Regardless, since the stock was trading at $10.90 last week and after hitting my radar while watching the CEO interview on CNBC it has performed quite well hitting $13.23 this morning. My acceptable profit margin with stocks and options is 20%. Once I hit 20% gain I start weighing many factors to determine how long I ride and how much additional risk I am willing to accept. Too often have I been  up 50, 60, 70 and even 200% (yes, happens a lot actually) and refuse to sell watching my profits dwindle to nothing. Greed (and panic) is not a strategy. Remember that. Always have a plan and stick to it. When my position in Nordic surpasses a 20% gain, I will start trimming and taking profits. The idea is always to buy more later on a dip, but unrealized gains are just that…unrealized.

Nordic American Tanker definitely takes the prize as the deal of the month. Hands down. If you are a recent, long-term investor you are killing it on the stock and will soon reap the benefit of the handsome dividend.

February 12, 2016 – UPDATED

I’m in somewhat of a hurry this morning, so I’ll keep this brief. Wow! What a ride this week! I sure hope everyone took my advice and purchased Nordic American Tanker [stock_quote symbol=nat]. I have learned it takes the market a day or two to react to certain things. Nordic was one of them this week. It was trading at $10.90 just a couple of days ago. I mentioned the CEO interview on CNBC the other day and how they have paid their dividend for 74 quarters with an average return of 11%. Today, two or three days later that same information came across the newswire and up goes the stock. It takes time…

Denbury Resources [stock_quote symbol=dnr] was just trading at $1.28 per share moments ago. This is a realized gain of 28% (if you sold it) from yesterday (before commissions) when I issued my email alert advising everyone to buy at $1.00. Hopefully, some of you actually read it and made a move.

Other trades I made yesterday right before the closing bell:

Bank of America [stock_quote symbol=bac] – doubled down on the APRIL 13 CALL option bringing the total to 200 contracts. Currently up $3,800 today.

Chevron [stock_quote symbol=cvx] – doubled down on the MARCH 92.5 CALL option bringing the total to 200 contracts. Sold moments ago at $1.06 profiting $4,600 today.

Ford [stock_quote symbol=f] – tripled down on the stock bringing the total back to 10,000 shares. Currently up $2,225.00 today. Update: Closed up $3,600.00 total. Go Ford!

I strongly recommend reading my latest article on Selling Covered Calls. I finished it early this morning, but I may revise it some over the weekend. Enjoy!

CLOSING BELL UPDATE!

Today was a great example of what active trading is all about. Yesterday, before the market closed, a few gut feelings run through you sending chills up your neck and you make some trades quickly. Trades that, within 24 hours, pay handsomely! As I’ve stated before I’m keeping this site as real as possible so I did lose money on Disney – again. I suppose I haven’t lost it yet because it’s still going back up…I just remain in the negative. So below are the trades of the day:

Bank of America [stock_quote symbol=bac] Update: Ultimately sold all 200 contracts at 2:22 PM for a $3,700.00 profit. I was hoping it would continue moving higher today, but it did not. I thought about holding it through next week, but in this market what do we do when we’re up? Sell it and take the profit.

Disney [stock_quote symbol=dis] – I don’t believe I mentioned this trade yesterday, but I purchased 115 contracts of the MARCH 100 CALL option at .55 cents. It’s currently trading at .39 cents (.40 market) and I’m in the hole almost a grand. Why did I buy more Disney you ask? Look at the chart. It has been steady climbing since Wednesday. I figured then that all the sellers would exit, eventually it would stop going down and the buyers would come back. That is happening, it’s just taking some time. If it dips next week, I’ll double down and lower my cost basis.

Starbucks [stock_quote symbol=sbux] – I cannot remember if I mentioned I added 50 more contracts to the APRIL 60 CALL option yesterday right before closing bringing my total to 150 contracts. With that option and the 1500 shares I purchased at $53 earlier in the week I am currently profitable $6,244.00 and decided to hold. I believe it will hit $60 a share again soon. There may be another dip coming, but it was worth the risk in case it jumps up to $59. I highly recommend buying the APRIL 60 CALL option and if we do see another dip, buy it down.

WEEK SUMMARY

I sold Chevron early during today’s session for a $4,600.00 profit, sold Bank of America later in today’s session for a $3,700.00 profit, lost over $2,000.00 on Disney, but still holding a March position. I am holding my Starbucks option with a profit of $1,945.00. I’m profitable on my Ford, GE, Home Depot, McDonald’s, Starbucks and Nordic Tanker stocks after buying more during the mid-week dip. My entire active trading portfolio jumped almost 10% today with the help from the CVX and BAC options BOTH of which I SOLD. Good week…can’t wait for next week!

Briefly, I want to mention the Nordic American Tanker trades from this week. They are a good example of how I operate: when I watched the CNBC interview and my gut screamed “BUY” I bought immediately and at a price that was higher than I wanted. Over the next few days the stock went down and I continued to buy it down in medium-sized increments until I owned a significant stake. My thought was if it keeps going down I’ll live on the dividend. By buying it down I lowered my cost basis with each trade and when it jumped yesterday and today I immediately became profitable. Therefore, the original trade(s) on February 8th and the price I paid at that time, really, became irrelevant in my mind. Profit is profit and buying down helps you take advantage of jumps like today.

I hope everyone enjoys their weekend…my brain needs a break!

The Bottom – Watch For It

birthdayHappy Birthday Jim Cramer! I am dedicating this post to Mr. Cramer because he inspires me every night and has made me a significant amount of money. Thank you!

I was just inspired by a comment he made on tonight’s show and I must admit it proves I am not crazy. This is something I have been thinking for several weeks as I watch the market fluctuate daily. It’s important and if you have a group of companies / stocks that you watch constantly like I do then what I’m about to tell you becomes easy.

In fact, having a group that you monitor daily is a requirement, but don’t have more than ten (10). You cannot monitor, research and track more than ten (10) and feel comfortable. Trust me.

Having a group and watching them daily forms a bond between you, the company, the stock and the price of said stock. It’s important you become familiar, almost one with the stock price. At any moment if that company is mentioned by anyone you should know what the current stock price is. This bond, this knowledge allows you to do the most important thing in trading…

Find the bottom.

Everyone complains about the market today. The violent fluctuations, the “flash crashes” and how the algorithms, God and even Santa Clause is at fault (we all waited for the Christmas rally that never came – thanks Santa). BUT, this volatility makes finding the bottom almost easy IF you’re paying attention.

Take McDonald’s [stock_quote symbol=mcd] for example. During Mad Money tonight someone called in regarding McDonald’s and everything he said was exactly right. The caller noticed McDonald’s was doing well, had a good dividend and while everything was crashing around it McDonald’s found a bottom and held. It not only happened with McDonald’s, but with many other stocks as well.

This week the market has been hammered and many stocks have dropped dramatically in value – have you seen Tesla? McDonald’s traded at $124 just a week or so ago and I purchased it at $115 Monday. The novice trader or investor would be scared to enter at this time or this price, but did you watch the stock? Did you notice the bottom? Again, watch any stock long enough and you can see it happen. Once McDonald’s landed around the $114-115 mark it stopped going down. It stopped going down when everything else continued to drop. Regardless of what the market did McDonald’s hovered and started going sideways and then back up and that’s when I pounced. Now, again, McDonald’s is not the only stock that did this. Home Depot landed at $110 and hovered. Ford at $11.02 last week and I knew if Ford broke $11 we were in serious trouble, but it held.

The great thing about extreme fear, volatility, a high VIX and overall bearish sentiment is when the market and individual stocks crash there is ALWAYS a price they stop going down. This sounds stupid, of course there is a price they stop going down, but it’s more than that. It’s a feeling. I’ve personally witnessed many, many stocks simply crash right before my eyes. I mean crash. I owned Disney at $112 and watched it crash to $103 within a matter of days. It just wouldn’t stop falling. Your stomach turns, your heart races, you get light-headed and think about bankruptcy and how all your friends and family will make fun of you and say things like, “this is why the middle class shouldn’t play the market” (thanks mom). You begin to realize you’re about to throw up at the very moment panic takes over. Then, it stops. You regain control of yourself, take a deep breathe and accept you’ve just lost more money than most make in a year, but it’s ok. You’re ok. You’re alive and the stock has stopped falling. This is what I’m talking about – the moment it stops going down. You just watched it happen. You felt it when your heartbeat dropped from 190 back to a reasonable 110 (ha). Now what?

There comes a moment when you realize the worst is over. Just like with SolarCity [stock_quote symbol=scty] at some point the stock becomes so cheap the buyers come back and the remaining sellers just can’t take the pain of walking away. Do not buy SolarCity you would have to be insane. I am using them only as an example.

When the sellers stop and the buyers come back in – this is the support level and what the market considers the stock to be truly worth after the carnage. That moment, that price will always be your point of entry if you want in. If you’re scared (which you will be) buy in slowly and watch it for a few days to make sure. If it bounces right back and you “lose” your chance so what. You’ve made money and there are worse things.  Viacom [stock_quote symbol=viab] is an example of why it is important to wait. If you thought $36 was a good price, you’re loving $31!

For me some of this trading “stuff” comes naturally and I don’t realize it. When McDonald’s hovered around $115 on Monday my antennas went up. When it dipped into the 114’s I said to myself, “you better buy it” and when it bounced back to 115 I bought it and it promptly fell back into the 114’s for a short period. I didn’t panic I just figured if it kept going down I would buy more around the 110-111 mark. You must have a plan and remain calm. I knew I wanted in, I knew it would go back up so really anything 115 or below was fine with me.

As your skill level and experience grow you will be able to find the bottom. I’m just glad to know I wasn’t crazy in thinking when a stock holds strong when everything else is crashing it’s a good time to buy and my boy Jim Cramer reaffirmed that tonight.

Thanks pal…Happy Birthday

February 10, 2016

Where’s the love Mickey asks…what did I do wrong he wonders? Sad to watch him wonder aimlessly through the “Leave a Legacy” attraction hearing him mumbling about the best quarter in company history – Walt Disney’s legacy never stronger.

My objective with this blog when I first started typing was to keep it real. No bullshit about making millions or the fast road to riches. I wanted and had tried to find a real website with real-world experiences. This is why I’m going to use Disney as my “human nature” post this week because, well, it’s human nature to shoot for the stars!

Disney [stock_quote symbol=dis] as you can see did not perform as I had expected. I am man enough to admit I was way wrong. I knew they would beat earnings, but I miscalculated the markets reaction. I noticed the option statistics yesterday were almost 50/50 CALL to PUT meaning half of traders thought it was going up and half thought it was going down. I’m a natural bull (hence the site name) and I’m always thinking when a company makes history their stock should go up. Silly me I suppose.

What you must understand is why it went down.

Disney investors are a little (a lot actually) touchy about ESPN and the dreaded phenomenon of “cord-cutters” – those that are leaving paid cable subscriptions for the new form of television like Netflix, Hulu and pay-as-you-watch platforms. Hulu, by the way, is owned by Disney and has yet to turn a profit. I discovered why just this past weekend when I tried to catch up on one of my new favorite tv shows “The Grinder” with Rob Lowe and commercials kept interrupting! How dare you show me commercials! I did a little research and realized you could buy out of the commercials for an additional $5 per month. This made no sense to me when I could just buy the entire season on Amazon Prime and be done – no monthly fee. I digress…

Disney investors are pounding the stock and fleeing like roaches after turning the lights on because they now believe Disney can do no better. This was it. The grand finale of revenue and profits so they’re out. It’s a good argument and I’m not saying I don’t understand, but really? Of all the media conglomerates you choose to abandon Disney? Foolish at best. I can remember at Thanksgiving when it was $122 per share. It will be there again – guaranteed.

Yes, to keep this site real I will admit I lost money this morning. Not much, I’m not that stupid, but I did put $800 on the FEB 19 2016 110 CALL and I just watched it dwindle to zero. I knew it was a gamble. I knew the risks and I knew it was a 50/50 shot. I understood the risk and I went with it. No reward without risk right?

This is the reality of trading and no book or online course or training video will prepare you for the human factor. Humans are impulsive, greedy and most of all dreamers. We hold little self-discipline in the heat of the moment and with trading you must be rock solid and have no fear at all times – try this when the underlying is crashing hard before your eyes. You will win big on some days and lose big on others and if you cannot swallow this fact you need not try. We as amateur investors far, far away from Wall Street really have a snowballs chance in hell of being correct all the time. We are lacking the most important, fundamental element: information.

Ok, enough with the preaching and negativity. Now for the trades I made this week that kicked ass. This is another part of trading that people find hard to handle: when you’re down and losing money on one you must keep buying and playing the game with others. It’s your choice to keep going or give up and it takes years to conquer this emotional side of trading. But below should make you feel better. Notice most of the below trades are stocks, not options.

Starbucks [stock_quote symbol=sbux]

All I can say is wow. When I saw Starbucks hit $52.63 the other day my neck was tingling and I knew I had to be in on that. It was like time travel – it was March 2015 all over again and I was back! The flux capacitor was firing on all cylinders (or Mr. Fusion) and I was scooping it up like candy. Purchased 1500 shares of stock at $53.00 – perfect. Purchased another 100 of the APRIL 16 2016 60 CALL at .55 cents (currently trading at $1.00). I was a mad man and it paid off. Disney who?

Home Depot [stock_quote symbol=hd]

The sky was blue, the sun was out and Home Depot was hovering at $110 per share. Was this heaven? Did I take stage left and didn’t realize it? No, it was just a down day on the market and yet again, I was scooping it up. Purchased 700 shares at $110.90 and based on the above quote – right on, right on…

McDonald’s [stock_quote symbol=mcd]

Anyone who has been through a McDonald’s drive-thru lately probably noticed it’s better. Not only is the ordering and accuracy better, but the food is better too. McDonald’s is doing well and I respect a company that can turn it around. Therefore, I purchased 100 shares at $115.48 and plan to hold long-term. It was $124 just a week or so ago…

Nordic American Tanker [stock_quote symbol=nat]

Anyone who witnessed the amazing interview with NAT’s CEO the other afternoon at 2 pm on CNBC bought this stock immediately (also why it jumped almost 10% during the interview). I’ve never seen a more amazing interview or inspirational, down-to-earth CEO. I liked him so much I went with my gut and bought 1000 shares at $11 that very minute. Not to mention the dividend is currently yielding 15%!!! This is not a typo – it’s 15%. The CEO made it very clear the dividend was safe, they had paid their dividend for 74 straight quarters at an average of 11% and he enjoyed making his shareholders money. Something he also said that I found very interesting was the fact they hold roughly 5 million of debt on each tanker and the scrap value of each tanker is 12 million. Think about that a minute. If they scrapped it and said screw it, they’re still in the black. He said the number one problem with CEO’s and other companies is they take on too much debt. I’m a firm believer in this and agree completely. He has my support…long-term.

So there are winners and there are losers, but the bottom line is: if you don’t try you will never succeed. Happy trading!

AHY Alert! – Viacom

viacomViacom [stock_quote symbol=viab] reported weak earnings this morning and has now tumbled more than 10%! Trading at just 6.21x forward earnings and yielding a not-too-shabby 3.82% before the downward spiral I would say this is definitely an AHY candidate.

Today Viacom with reach a 5 year low and IF you are interested in the large cap consumer discretionary sector this would be a good time to buy. Start small – 100 shares today and see where she goes tomorrow.

No matter the direction she will become an accidental high yielder (AHY) today yielding 4.4% if the stock stabilizes at the current price of $36.70 as of this writing. 12-Month target price currently $40.

The Viacom announcement is currently punishing all media companies including FOX [stock_quote symbol=fox], Time Warner Cable [stock_quote symbol=twx], and, of course, Walt Disney [stock_quote symbol=dis]. Somebody tell Mickey something positive! Quick!

Disney FEB 19 2016 100 CALL currently trading at .05 BID / .08 ASK and .075 MARK. Come on baby…

February 9, 2016

moneyIt’s earnings day! Well, really just about every day is earnings day during earnings season, but today is the day I’ve been waiting for personally.

Today we hear from several of my favorite companies including: CVS [stock_quote symbol=cvs], Coca-Cola [stock_quote symbol=ko], Goodyear Tire [stock_quote symbol=gt], Viacom [stock_quote symbol=viab] and, of course, our beloved Walt Disney [stock_quote symbol=dis]. A big day full of excitement, a few laughs, probably more tears than anything, but entertaining at the very least.

So let’s just punch the elephant in the room and get it over with: the Burbank, California media giant Walt Disney is scheduled to report its fiscal first quarter earnings after the closing bell this afternoon. Here’s what you need to know: the analyst God’s are predicting $1.45 EPS compared with $1.27 reported a year ago. I believe I stated this as $1.46 in another post, but I’m seeing both. Analysts also expect revenue of $14.76 billion, compared to $13.39 billion reported a year ago. The conference call is scheduled for 5 PM EST.

Currently Disney trades at a P/E ratio of 18.8x forward earnings. If my calculations are correct and $1.45 EPS is reported for the past quarter AND the sentiment is positive looking forward AND the tone towards ESPN turns positive then I estimate the stock to be worth roughly $109.

The number one issue on the minds of all Disney investors is the viability of ESPN and the future of cable television. ESPN and the fear associated with cord-cutters is simply sucking the life out of Disney. If not for this dark cloud hovering over Mickey all the damn time the stock would be much higher. Poor Mickey just cannot escape the doomsday scenarios for pay-tv and whether or not this is the beginning of the end for ESPN as we know it. Since an August revelation that earnings growth was somewhat slower than the company previously predicted, analysts have been debating how much cord-cutting is really hitting the sports giant; how bad are higher long-term fixed costs; and when or whether it should launch a spectacular online, subscriber-based offering of some kind.

ESPN and the concerns surrounding its future, I believe, is directly responsible for the 25% drop in Disney’s stock price since November (and my loss of a great deal of money). Disney moving forward, and especially today with the conference call, must change the tone related to ESPN. Today’s conference call is a prime opportunity to do just that and I am anxious to hear what is said. For the love of Pete, please, change the damn tone!

Star Wars merchandise and the Shanghai Park are other Disney investor concerns. The much anticipated Shanghai Park is scheduled to open on June 16, 2016, at a cost of $5.5 billion and investors are eager to see what effect, if any, revenue generated from the new park will have on the bottom line.

Disney is a great company and there is no denying that. It has been hammered lately and reached a new 52-week low yesterday when it hit $89.51. I was watching it closely and felt $90 was a great entry point for any long-term investor (like me). The direction of Disney stock in the next 24 hours will be directly related to ESPN and what, exactly, is said during the conference call. If the market likes what it hears I definitely see the price bouncing higher. However, if the tone of ESPN remains negative we might just see a bloodbath regardless.

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