Bull or Bust

a bull's view

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.

TAKE COVER! FIND SHELTER!

bombDrama has never been my thing, but if you’re watching the market today thinking, “holy cow, I need to find somewhere safe to hold my cash for awhile” then you’re not alone. It’s always good to have a certain amount of your portfolio stashed away and typically people use Gold. However, if you are interested in stocks and the idea of being paid to wait (dividends), I have compiled a list below of stocks that barely move during days like today. I have also included the opposite and high risk stocks if you’re willing to risk some cash. Enjoy!

Stable. Safe. Predictable.

AT&T [stock_quote symbol=T] – Hands down the most stable over the past few years. It barely moves, pays a great dividend and even on terrible days like today it has only dropped .16% or .06 cents.

US Bank [stock_quote symbol=USB] – I’m slightly biased on USB. In the past, I’ve had many accounts, loans and mortgages with USB and I have always loved them. With that said, over the past three (3) or four (4) years it has remained between $35 and $45 per share. In the past year during increased volatility and our new bear market it has remained around $40. The dividend is not that great, but pretty damn good for a financial institution at 2.54% yield.

Coca-Cola [stock_quote symbol=KO] – Someone once said you do nothing with Coke but own it. I agree. Dividend is currently yielding 3.11% and during the 2015 high volatility it has held strong.

Volatile. Risky. Scary Shit.

Facebook [stock_quote symbol=FB] – Up one day, down the next. Fortunes have been made and lost on Facebook, but it always recovers and I believe we will look back in years to come and wish we had purchased more. Where to buy? No one knows, but fun to play.

Home Depot [stock_quote symbol=HD] – I really cannot believe I’m including this company in my volatile list, but whoa boy has it come down! I haven’t seen it this low since this time last year. With Spring coming I would be a buyer anywhere around $110.

Alcoa [stock_quote symbol=AA] – I have always liked Alcoa and they pay a modest dividend that could be subsidized with covered calls if you really want to go long. I have seen Alcoa at $15 and $6.50 in the last year. The is no predicting this stock, but fun to trade!

DISNEY – Here we go!

Walt DisneyHonestly, I gambled (literally it was a gamble) on Disney back on opening weekend of Star Wars. Yeah, I thought that faithful Thursday that I was going to get rich when Star Wars made box office history and I really think I would have been correct had it not been for that moronic analyst that decided to downgrade Disney [stock_quote symbol=DIS] the next morning – the Friday before opening weekend. So Disney crashed and I watched my hard earned cash disappear. Personally I still believe that analyst and his firm were upside down with Disney and probably purchased a ton of PUTS before releasing such negative thoughts before that weekend, but who am I.

Back to the story: I knew it was a gamble. I knew it was gambling. There was no strategy, no planning, no “ejection point”, just an impulse buy (never do that). I just had a hunch that the movie would do well so the stock would do well and went with it. Ouch. Fast forward to today and we have a much different story.

On Tuesday, February 9, 2016, Disney  will report 1st QTR 2016 earnings AFTER the closing bell. I see the same thing happening to Disney as Facebook. The stock got hammered with the terrible opening of January, with the downgrade and with the opinion that “cable cutters” would be fleeing in large numbers. Hell, even the future of ESPN was in question (Disney owns ESPN for those of you who don’t know). I’ll mention the Fast Money gentleman that said Facebook was going to $85 a share back in October one more time…

The company and the stock have been made fun of, sacrificed for “better”, more “stable” stocks such as AT&T [stock_quote symbol=T] and really just flushed by most. Speaking of AT&T…it has done very well. It is extremely stable, a safe place to store money, has an excellent dividend yield of 5.21% currently and I remember when the stock hit $33.70 not too long ago. You would be doing well had you caught AT&T on that dip. Regardless, Disney has been punished for stupid reasons long enough…

On Tuesday Disney has the chance to show the world it knows what it’s doing. Wall Street is estimating $1.46 EPS up from $1.27 for the same period a year ago and $14.76 Billion in revenue. The expectations are growing and so is my desire to take the gamble yet again. I’m looking at the FEB 19 2016 110 and 120 CALL options currently trading at .05 and .01 cents respectively. I have been watching these two options for a couple of weeks now and I can already tell you that the 110 strike trading at .05 was .02 just a few days ago. Do the math. Reminds me of a Facebook [stock_quote symbol=FB] option I purchased two weeks ago for .16, sold at .35 and watched it go to $4.25! I’m not saying Disney will do what Facebook did, but you just never know.

In the end, Disney is near the 52-Week Low and I do not see it going below $90. At this price it’s a steal for the long-term investor and pays a modest 1.51% yield (which could be subsidized by selling covered calls). I feel Disney is worth between $105-$110 per share and if they beat earnings and knock it out of the park it may very well reach $110 sooner rather than later – $100 at the very least.

Let’s hope the mouse outsmarts the bear on this one…good luck!

Stocks mentioned in this post:

DISNEY  [stock_quote symbol=DIS]
AT&T  [stock_quote symbol=T]
FACEBOOK  [stock_quote symbol=FB]

February 3, 2016 – What a day!

Today was simply fantastic for an options trader. It was literally what dreams are made of and I could only pray the rest of the year behaves the same way. As the market opened the day seemed like any other, but then things turned red…really red. The DJI dropped nearly 200 points reaching 15,900 and some change and the bears were out in force yet again. In days gone by this might have caused panic or a selling frenzy, but not today! All I saw was opportunity and when 16,000 came around I started buying everything I could get my hands on that didn’t scare me to death (NFLX) [stock_quote symbol=”NFLX”] or remain too high in my opinion.

I bought March and April CALLS on Home Depot, Starbucks, Alcoa, Ford, Facebook, Chevron…all my market darlings. The best trade I have made this week was the Alcoa [stock_quote symbol=”AA”] FEB 19 2016 7 CALL for .43 cents on yesterday. I dropped almost 10k down for 200 options and sold them at .80 cents around 2 pm. Yes children, that’s an 85.66% gain and $7,377.00 profit in 24 hours (without the juice). Now that’s trading…

Luckily I had also purchased PUTS on Chevron [stock_quote symbol=”CVX”] and Starbucks [stock_quote symbol=”SBUX”] on Tuesday anticipating more carnage and sold them at modest gains early in the day. Chevron made a good comeback in the afternoon so I missed that bullet too. How? By selling the PUT early while I was ahead and accepting the modest gain in a volatile market and buying a CALL. That’s managing volatility with two different methods during a single session. The stock went down the PUT made money – get out and buy the CALL. The stock goes up the CALL makes money – get out. The PUT cleared several hundred, the CALL was up a grand at the closing bell so I let it ride until tomorrow. That’s a gamble, but one I was willing to take today (not every day).

Seriously, getting out while you’re ahead is difficult and greed is a strong emotion. The most difficult thing you, as a trader, will ever do is overcome the impulse to let it ride and keep making money. It is strongest when you’re ahead so be very careful. Set a percentage gain that will satisfy your greed and when you reach it – EJECT! Always – no questions asked – no excuses. If there is one “secret” to trading that I can share it is to always get out while you’re ahead. Below is the best quote I ever heard a money manager say (I still laugh when I hear it):

“The best way to make money…is not to lose money”

This is so true. When you’re up get out. Regardless, this was my trading day and it was quite successful. Why you ask? Because of volatility plain and simple. The DJI [stock_quote symbol=”.DJI”] actually closed UP almost 200 points. I couldn’t believe it. A swing of nearly 400 points in a single day!! Fantastic I tell you, fantastic.

Daily Trades – Most Important

The most important and strategic trading I did today was related to Ford [stock_quote symbol=”F”]. Ford opened around $11.64 and quickly fell all the way to $11.02 before rebounding (thankfully) to $11.47 by the closing bell. This is actually typical for Ford and has happened many times while I’ve been actively trading it. I continued to add to my existing position in the APR 12.75 CALL all the way down starting at .15 and ending at .12. The option closed at .16, but I could have sold at .17 so I ended the day profitable (on paper) with the options I purchased this morning. Hopefully, tomorrow we will see $11.70 again. Fingers crossed

Deep Thoughts with James Day

Some of you might catch the SNL reference with the title, if not too bad. Here are my current thoughts regarding the top five (5) stocks I’m watching:

FORD (F)

This is just sad. To watch this stock drop and investors disrespect such a great company is almost painful. Ford has done nothing but do everything right. To put it plainly they are killing it. They’re making money hand over fist, have plenty of cash, are giving back to their shareholders, looking to the future with electric and autonomous vehicles and just keeping it real frankly. They’re well liked and they’re vehicles look great! I personally chose the new F-150 (Platinum of course – thank you Facebook) over my beloved BMW M3. Yes! I chose an F-150 over an M3. That should tell you how fantastic Ford is doing (I’m a huge BMW fan for those of you who don’t know me). Just buy Ford and shut up about the auto industry. Good lord…

STARBUCKS (SBUX)

Here is another company / stock that everyone loves to disagree on. Some say it’s going up and is the best thing to happen to consumer discretionary since Wal-Mart. Some say it’s going down because they can’t possibly keep going up (that’s the only reason I can think of that people are negative against SBUX). Ok so they have China exposure and they’re tied to the masses having money to buy latte’s and the price of coffee is always a concern. I get all that, but damn let’s be honest, everybody loves Starbucks and I personally spend so much money with them I have no choice but to own stock!! Again, it’s a buy and anyone who says it is not will be sorry in the future. Did you read about their expansion plans??

FACEBOOK (FB)

Ohhhh my, my, my. I would LOVE to get my hands around that big nosed guy on Fast Money that told everybody Facebook was going to $85 back in October. For a split second I believed him and it cost me big. People are STILL saying it is overvalued and will dive any minute. Just wait for it. Wait. Oh wait it’s going back up!! Facebook will be up there with Google in two years. You watch. It will win against the pessimist’s I assure you. Listen, I can’t stand Facebook personally. I don’t understand the need to share your entire life with your friends. Like we give a shit. What I’m saying is this company has it going on. They have figured out how to monetize their platform like no other and their ability to generate revenue in the coming years is simply unbelievable. Congrats FB…you won me over.

HOME DEPOT (HD)

I just like it. Nothing more to say. Lowe’s is terrible and Home Depot has always warmed my heart. It didn’t hurt that I made 5k back in September on an option and I’ve been trading it ever since. I believe we will see HD hit $130 again…soon.

CHEVRON (CVX)

This last one was hard. I have several more that I like, but if I had to pick the one I would invest in today with large sums of money and hold for years to come I would have to say Chevron (amongst the other five (5) listed here). Chevron, to me at least, has always felt like Home Depot. There is something about it that I just can’t put my finger on, but I love it. The current 5.02% yield doesn’t hurt either! Currently Chevron trades at $81 and some change. It had a hard day today due to the ever volatile price of oil. Who cares! I told everybody when it hit $66 last year and $75 last week to buy, buy, buy. If you already own it and you’re getting slaughtered – buy it! Lower your cost basis at the very least. Sit back and enjoy the dividend. Many years from now you will be glad you did. Anybody remember when Ford was $1.17? I do…eventually everything recovers.

Disclaimer: my opinions are just that – my opinions. I do not currently own positions in any of the above companies, but I will…

February 2, 2016

Hello everyone! I hope the market is treating you well. First, some non-market related news:

Website Redesign Coming Soon!

We will be redesigning this site over the coming weeks / months in an effort to make it look more contemporary and less 1984. However, I loved the 80’s and see nothing wrong with 1984. Regardless, the site looks rough and I understand this so I have contracted our web guru to take care of it. He is fantastic and you may learn more by visiting www.confitdesign.com.

Web Domain Name Change

The original domain name for this site was jamesrday.com and it has served me well for this purpose to-date. However, due to the fact I am reactivating my Real Estate License and needed a personal website I have decided to use jamesrday.com for Real Estate related matters and bullorbust.com for trading and market related information. I credit James at Confit for this idea. Please make a note of this. Again, the new trading / market related website address will be www.bullorbust.com.

Now for today’s market and trading news!

If you take some time and look back at previous posts you will see where I strongly suggested buying Starbucks (SBUX) anywhere in the $56-$57 range. Shortly after writing that post it indeed traded in that range and it was a perfect buying opportunity. Starbucks is now trading at $60.69 as of close today which equates to a 6.47% gain before commissions. Not too bad and please remember that’s at close today…a very bad day. It was trading well above $61 just yesterday and profits could have been taken. Remember, in the current market conditions you take profits when you can. Several days of good will always equal at least one day of bad. If you’re trading options this means 20-30% gain is always better than 3.5%. I have a story about this below.

Starbucks at $61 is dangerous currently. It’s a 50/50 shot as to the direction it takes from this point. If you’re in it and like the company then ride it out. I believe strongly this is a $65 stock. If you’re waiting for the next entry point (like me) then I suggest anything below $60. Based on the sentence above my exit would be anything above $65 if you’re trading. If you’re investing (completely different strategy) and it hits $65 I would keep it for the long-term.

NETFLIX – Love it or hate it, but don’t own it. Trade it.

Because this site is dedicated to the reality of trading and not the bullshit you see and hear on tv I will share my sad story from yesterday. Currently, due to the tax man, I am hoarding cash so I have less than 25k in my TD Ameritrade account. What does this mean? Why is this important? Because you cannot buy and sell or sell and buy the same stock or option within the same trading session more than four (4) times in five (5) days or they will literally halt your trading for 90 days. This SUCKS! It used to be 5 / 5 by the way, but the notice I received last Friday said 4 / 5. Even worse! Stupid rules…

So my point is I have to watch very carefully what I’m buying, why and how long I intend on holding. For example (getting to the stupid part from yesterday): Upon market open when Netflix was hovering around $91 a share I noticed A) it was going to be a good day for trading and B) Netflix was going to have a good day as well. I could feel it. Therefore, I purchased a single option for the MAR 18 2016 95 CALL @ $6.30 for a total of $630. No big deal just trying to make a quick buck and knew I would sell it today (within 24 hours). I had a feeling the first day of the month was going to be good.

It was.

Netflix shot up over $97 a share and my single option went from $6.30 to $8.02 gaining 27.3% before I could blink and I even purchased late when the underlying was around $94!! But wait! I can’t sell it! I’m up 27%, but if I sell it I will get tagged a day trader (yet again) and risk losing my trading ability. Well crap…I have to wait. Now, anyone who trades knows that time, in most cases, is your enemy and I knew this. I suffered all day watching Netflix go back down. I was furious.

This morning as the market opened I was cleared to sell and thankfully Netflix remained up for a short period of time. I sold at $6.75 and cleared 3.59% AFTER commission. This sucked, but at least I remained in the black especially given the fact Netflix is now close to $91 again and that same option is hovering around $5.05.

The moral of the story? Take your profits when you can and don’t be afraid to reset knowing you missed your chance. I have enough experience to know I indeed missed my chance, but making $23 is better than being down $130!!

Trading Activity For The Day

Sold everything except my Ford. Doubled down again on the APRIL 15 2016 12.75 CALL at .20 cents each after having made 75% and selling at .34 yesterday. Have another order in for 22 more at .15 if it decides to continue falling with a current position of 38 options.

I understand the auto industry has probably peaked. I get that. However, I do not agree with the current price for Ford stock. This is ridiculous. Ford is knocking it out of the park, they’re making the best looking vehicles and they understand how to make money and stay alive. Don’t even get me started about the dividend opportunity! You would be a fool to sell Ford stock.

January 21, 2016 – Much Better!

I had a sneaky suspicion yesterday may have been the bottom. Is it possible? Could over a 1,000 stocks hitting 52 week lows trigger a rally? Maybe, just maybe. The rise in oil didn’t hurt that’s for sure, but will it hold is the million (or billion) dollar question. I doubt it, at least not right now. I’m sure, much like everything else, it will continue to bounce around in the weeks to come. More than likely all the “shorters” out there are simply covering their shares thinking everything is pretty damn low and it’s just not worth the risk. Tomorrow and definitely next week will be a very important indicator as to how February will go.

I began buying options yesterday before lunch (thankfully) and pretty much sold them all this morning at significant profits. I indeed sold my Starbucks during early trading and right before the closing bell when the underlying stock price was around $59.22 I bought a bunch of the SBUX MAR 16 55 PUT. I believe this was a good call (or PUT haha) based on what the stock did after closing and after the earnings report came out. Whoa boy! Man…did the stock fall. Last I looked it was hovering around $56.80 again which seems to be its recent support level. Tomorrow morning should be interesting. Will it hold steady? Continue to plunge? Who knows, but my PUT may very well be ITM (In The Money) come 8:30 AM. It was high risk yesterday to buy a CALL the day before earnings, but it goes to show you sometimes the underlying is just too damn cheap to pass up. Implied Volatility becomes your enemy after an earnings report – you may experience a “volatility crush” which I will explain another day.

Some of you have noticed my trading strategy or habits have changed recently. It’s true and I am trying hard to desensitize myself to actually selling something. It goes against everything in my body to sell especially when I’m on a roll or up 83% like I was with SBUX this morning. Something inside me just wants to hold on and let it ride. I suppose it’s the risk taker in me and I imagine those of us who trade options probably all have this problem considering you have to be half crazy to do this. My significant other pointed out many months ago that when I run around the house screaming I just made 83% I’m actually full of s***. You don’t make the profit unless you actually SELL IT and turn it back into cash. It turns out I have a huge problem with this. Submitting a sell order has been hard for me and the inability to execute has cost me a significant amount of profits (cash). In fact, had I always sold when ahead I would have roughly $75,000 more in the bank today just from screw ups in 2015.

Disclaimer: there are times when selling is a horrible mistake. I have an infamous story about selling F, GE and AA on September 28, 2015 at 10:30 AM  and taking a freaking red bath with a $33,000 loss when six (6) business days later those same options were worth over $260,000. Yeah, I stopped trading and stayed in the dark eating pringles for a month after that. As Jim Cramer once said, “panic is not a strategy” and I panicked that day – right before October began a fantastic rally. So my rule about panicking is simple: don’t do it. If you find yourself panicking and you can feel your heart beating through your chest and you are picturing your spouse packing his or her bags and leaving forever do NOT do anything. Walk away and give it a day. No matter what. In my defense, I was sick and had fever on September 28th while attending a continuing education real estate course so I was not in the best position to be trading and should have done what?? Walked away. It was a Monday and by Friday I could have bought a Ferrari.

I let it ride too much and I need to AT LEAST take some off the top when ahead. I should write an entire article about taking some off the top. I have been practicing this week and it has worked out very well. Everyone needs to adhere to this most important rule. So yes, I sold ALL of my SBUX at an 83% gain this morning. Am I sorry? Hell NO! Have you seen the stock price tonight?? This is exactly what I’m talking about. Sure, it was a MAR option so I had plenty of time for it to recover, but why claw your way back to where you were this morning two weeks from now? Sure, it could have shot straight up and never looked back which is what it did last year, but I don’t believe 2016 is the year for taking risks when you’re UP 83%. I could have taken some off the top, but I knew earnings would go South. I just knew it because so far YTD this market hasn’t liked anything anyone has said and I was right.

Another fun fact: Back in October of 2015 I was up 223% on an SBUX option and foolishly didn’t sell it. I was watching its little life drain away and even when it was back down to a mere 64% gain and falling I still thought it would go back up. I ultimately sold it at a 30% loss. DUMB! As a trader you can get into this toxic mental state of convincing yourself of anything and it will eat you alive. Trust me. Better to SELL, take the profit, reset your bank account and live to fight another day. On rare occasions you will look back and say, “well s***, had I held on to it I would have made 130% instead of 60%” (actually happened), but it is more likely you will look back later and be damn glad you got out.

It is my amateur opinion to BUY SBUX if it gets anywhere near $56.00 or below and hold it forever. This is not a trade…it’s a lifer.

1,000 Stocks Hit 52-Week Lows

Over 1,000 Stocks On The NYSE Just Hit 52-Week Lows

1:53 pm ET January 20, 2016
Market sentiment has officially turned negative. Ok, more doom and gloom. Here we go again, but don’t you see the opportunity?!? Over 1,000 stocks hitting lows they haven’t seen in a year? All those moments in 2015 you kicked yourself for not buying stock. The Starbucks, Ford, Home Depot and Chevron’s you let slip through your fingers all right here waiting. Don’t even get me started about GE (I owned it at $24 and sold it), I’ve been waiting for it to come back down for what seems like an eternity. In a year, maybe two or five we will all be kicking ourselves for not buying everything in site. So what happened after lunch today?

BUY, BUY, BUY – that’s what happened. We saw the first real positive move upwards since the first of the year in my opinion. The upward trajectory of stocks like Alcoa, Ford and Starbucks looked better than they have in weeks and they turned almost straight up around lunch. Maybe January will go down in history as the worst opening on record, but maybe, just maybe February will be when it all turned around.

By the way, if you’re wanting more option action: the HD (Home Depot) Feb 19 115 PUT, had you purchased it yesterday, would have made you 100% gain before lunch as the market crashed. Had you dumped it at lunch and bought the equivalent 120 CALL you would have made another 50% riding it back up until closing. Anybody trading HD today – congrats!

Stocks Hitting 52-Week Lows

Alcoa Inc (NYSE: AA)

Ambarella Inc (NASDAQ: AMBA)

Bank of America Corp (NYSE: BAC)

Bed Bath & Beyond Inc. (NASDAQ: BBBY)

ConocoPhillips (NYSE: COP)

Caterpillar (NYSE: CAT)

Dunkin Brands Group Inc (NASDAQ: DNKN)

3D Systems Corporation (NYSE: DDD)

1-800-Flowers.Com Inc (NASDAQ: FLWS)

DaVita HealthCare Partners Inc (NYSE: DVA)

Garmin Ltd. (NASDAQ: GRMN)

Groupon Inc (NASDAQ: GRPN)

Jazz Pharmaceutical (NASDAQ: JAZZ)

J C Penney Company Inc (NYSE: JCP)

Mobileye NV (NYSE: MBLY)

Oracle Corporation (NYSE: ORCL)

Transocean Ltd (NYSE: RIG)

TASER International, Inc. (NASDAQ: TASR)

 

January 20, 2016 – What a Day!

So today was full of excitement!

Up and down we go, but if you’re trading options this is fantastic! Before lunch, around 11:30 AM I noticed SBUX underlying stock price was hovering around $55.50 and I just couldn’t believe it. What a buying opportunity. I haven’t seen it this low since early last year and I kicked myself for not buying it then (especially when it split and sat at $48). So I purchased 20 of the March 16 60 Strike Call Options for $1 each resulting in a total purchase price of $2000 without the juice (commission). Pretty happy with that purchase I began looking at other options (pun intended) and went ahead and picked up March Alcoa, Chevron and Nike Call options as well. I had an order in for Ford, but cancelled it and doubled down on the SBUX March 16 60, again at $1. You just can’t pass up $55.50 and they report tomorrow! Normally, buying options the day before earnings is a bad idea, but I believe the market is way oversold and their earnings will be on the good side so we might just get a nice bounce upward.

So I doubled down on SBUX and when all was said and done I had “spent” or actually risked around $14,000 total. Several people laughed at my purchase of Chevron Call Options given the price and status of oil, but Chevron was hovering around $75 and I just saw it at $84 not a day or two ago. It’s moving around quite a bit – just what I like to see! Sure it could go back to $66, but not before a bounce! You must have large ones to play this game, so if you’re scared go read a book. After my purchases I went to lunch, enjoyed Newk’s as usual and really forgot about the market. Part of being successful at this is learning when (and how) to shut it off. Discipline my friends…easy to say…excruciatingly difficult to execute.

Around 2 PM I logged back into my trusty TD Ameritrade mobile app and wouldn’t you know it…I was up $4,500.00! Now that’s a good lunch! My Chevron was up over $600 due to the underlying stock price reaching damn near $80 before trailing off a bit. Starbucks was kicking ass and taking names making it back to $57.50 a $2 increase of the underlying in 2 hours roughly. Ford was up (I did purchase 500 shares of regular stock at $11.55 – excellent). My Nike option was up over a $1,000 alone so I sold that puppy. This goes to show you how quickly you can make money in the option world in just a matter of a few hours. Yes, you can lose it just as fast – disclaimer.

The discipline becomes increasingly important at this moment. Sure, we all love to see things going up. Your initial reaction is to hold it because you think it’s going to keep going. It’s human nature and there’s nothing wrong with you. Sometimes it does! Especially in a bull market which we are NOT in. Experience, however, tells me this is a bounce and not a trend so what do you do??? You sell the strength and buy the weakness. Plain and simple. Sounds easy, looks easy, everything is easy looking back, but when you’re in the moment it will be one of the hardest things you’ll ever do. Regardless, I sold the AA (Alcoa) and NKE (Nike) taking my profits – over $1200 combined in 2.5 hours. I kept the Starbucks, Ford and Chevron to fight another day. I will probably sell F and CVX tomorrow and keep SBUX until Friday. That’s the plan for now.

Today was up and down for sure. There were good times and bad, tears of fear and tears of joy, but that’s trading…

Stock and Option Trading