My mother-in-law sent this to me. Enjoy!
On their way to get married, a young couple is involved in a fatal car accident. The couple find themselves sitting outside the Pearly Gates waiting for St. Peter to process them into Heaven. While waiting, they begin to wonder, "Could they possibly get married in Heaven?" When St. Peter showed up, they asked him. St. Peter said, "I don't know. This is the first time anyone has asked. Let me go find out", and he leaves. The couple sat and waited, and waited. Two months passed and the couple are still waiting. As they waited, they discussed that if they were allowed to get married in Heaven, what was the eternal aspect of it all. "What if it doesn't work?" they wondered, "Are we stuck together forever?" After yet another month, St. Peter finally returns, and said, "Yes". He informed the couple, "You can get married in Heaven." "Great!" said the couple, "But we were just wondering, what if things don't work out? Could we also get a divorce in Heaven?" St. Peter, red-faced with anger, slammed his clipboard onto the ground. "What's wrong?" asked the frightened couple. "Oh, come on!", St. Peter shouted, "It took me three months to find a priest up here! Do you have any idea how long it'll take me to find a LAWYER??!!! "
Saturday, July 9, 2011
Friday, July 8, 2011
More on Stock Splits
STOCK SPLITS
One of the things I've written on extensively is what I call "The Forklift." I used to call it "compelling reasons." Either one works. Here's how it works. You are working in a warehouse. A big, heavy box needs to be moved clear across the warehouse. You need a forklift to do so. You look around and see and do not see a forklift. The box is not going to be moved until you find one.
In the market, you have a stock that needs to move, we'll assume up. You look around and ask, "Where's the Forklift?" What is it that will move the stock from $92 to $120? (Like the LULU trade) What "impending event"---stock split, earnings, dividend, expansion, end of lawsuit, new management, merger, acquisition, etc.---is going to move the stock. Just hoping it will move is not enough. It needs a real event, real news to make it go.
Then and only then should you get involved. Oh, and usually the event should happen in a few days. You don't want the box sitting too long on the warehouse floor.
Again, keep your eyes on LULU. There are a host of things to learn.
One of the things I've written on extensively is what I call "The Forklift." I used to call it "compelling reasons." Either one works. Here's how it works. You are working in a warehouse. A big, heavy box needs to be moved clear across the warehouse. You need a forklift to do so. You look around and see and do not see a forklift. The box is not going to be moved until you find one.
In the market, you have a stock that needs to move, we'll assume up. You look around and ask, "Where's the Forklift?" What is it that will move the stock from $92 to $120? (Like the LULU trade) What "impending event"---stock split, earnings, dividend, expansion, end of lawsuit, new management, merger, acquisition, etc.---is going to move the stock. Just hoping it will move is not enough. It needs a real event, real news to make it go.
Then and only then should you get involved. Oh, and usually the event should happen in a few days. You don't want the box sitting too long on the warehouse floor.
Again, keep your eyes on LULU. There are a host of things to learn.
Money and Politics
Hello, my friends,
All is well here. I keep my ear to the ground on the economy. It's amazing how interlinked money is to politics. A few days ago, Mr. Obama said that "you can't cut spending your way out of this mess." That's paraphrased. I beg to differ. It's the only way. Tell me how you tax you way to prosperity. It has never happened and it will never happen. What about more regulations and making it harder for business to start up and grow? We don't need more regulations. How about borrowing you way to an economic recovery? Nope, won't work. How about running up trillions more in debt? If anyone thinks that's the answer, than they should move to Europe. What about hiring more government workers? How about giving in to the government unions? What about . . . what? Well we're back to spending. What about lowering spending, reducing the size of government, and stopping all this nonsense?
Richard Roberts, Professor of Economics at George Mason University, said, "The other challenge is simply confidence. Businesses aren't hiring because they're uneasy about the future. There's no easy way to instill confidence, but we know how to kill it---create uncertainty about taxes and regulations."
Wade Cook says: "President Obama has no common sense to know how to lead and manage, therefore he has no common sense to realize how wrong his policies really are."
Thanks, Your comments please.
Wade
All is well here. I keep my ear to the ground on the economy. It's amazing how interlinked money is to politics. A few days ago, Mr. Obama said that "you can't cut spending your way out of this mess." That's paraphrased. I beg to differ. It's the only way. Tell me how you tax you way to prosperity. It has never happened and it will never happen. What about more regulations and making it harder for business to start up and grow? We don't need more regulations. How about borrowing you way to an economic recovery? Nope, won't work. How about running up trillions more in debt? If anyone thinks that's the answer, than they should move to Europe. What about hiring more government workers? How about giving in to the government unions? What about . . . what? Well we're back to spending. What about lowering spending, reducing the size of government, and stopping all this nonsense?
Richard Roberts, Professor of Economics at George Mason University, said, "The other challenge is simply confidence. Businesses aren't hiring because they're uneasy about the future. There's no easy way to instill confidence, but we know how to kill it---create uncertainty about taxes and regulations."
Wade Cook says: "President Obama has no common sense to know how to lead and manage, therefore he has no common sense to realize how wrong his policies really are."
Thanks, Your comments please.
Wade
Stock Splits
Obviously it's hard to get information in a timely manner on this side of the wall. It's a challenge. However, LULU (LuluLemon Athletica) has done well.
One student in Fairbanks has taken about $1,000 and made about $5,000 in 12 days. It's coming up on a stock split today. It's a 2:1 and will be reflected on Monday. The stock has gone from around $80 to $122. Over the years I've noticed that on the ex-date, in this case Monday, and shortly thereafter, the split stocks back off a bit. Not to despair, because they soon run into the next earnings season, and almost always they do well on the earnings front.
I've probably looked at the charts of about 2,000 stock splits---in many ways now a more popular strategy than rolling stocks---and I can only remember three which never backed off after the split. One was Coach (COH), the women's purse and bag company. I don't remember the other two. These split and just kept going. LULU could do the same.
It has an off-year end---Jan. 31. So, instead of June 30 being the quarter end, it's July 31st. Earnings will be sometime in August---probably around the 15th or 18th. You can look it up. So, the summer rally has started. In fact, it started early this year. It usually ends about mid-August. This year will probably be different. Who knows about the politics associated with the so-called debt crisis.
Okay, so, the game is still afoot. Watch it tomorrow. It's been a nice increase. Will it continue. I think Molly just bought the July 125 calls for $1.75. This is a cram-play. She only bought two contracts, or $350. I think she's going for a double. I don't know where the sell point is, but a double would be nice. Again the split is tomorrow, the expiration for July is next Friday, the 15th.
Watch and learn. It's fun to learn at someone else's expense.
Thought for the day: "It's a wise person who realizes the need for an extra, independent source of income." I add, wiser yet, if that person gains the skills to accomplish this.
One student in Fairbanks has taken about $1,000 and made about $5,000 in 12 days. It's coming up on a stock split today. It's a 2:1 and will be reflected on Monday. The stock has gone from around $80 to $122. Over the years I've noticed that on the ex-date, in this case Monday, and shortly thereafter, the split stocks back off a bit. Not to despair, because they soon run into the next earnings season, and almost always they do well on the earnings front.
I've probably looked at the charts of about 2,000 stock splits---in many ways now a more popular strategy than rolling stocks---and I can only remember three which never backed off after the split. One was Coach (COH), the women's purse and bag company. I don't remember the other two. These split and just kept going. LULU could do the same.
It has an off-year end---Jan. 31. So, instead of June 30 being the quarter end, it's July 31st. Earnings will be sometime in August---probably around the 15th or 18th. You can look it up. So, the summer rally has started. In fact, it started early this year. It usually ends about mid-August. This year will probably be different. Who knows about the politics associated with the so-called debt crisis.
Okay, so, the game is still afoot. Watch it tomorrow. It's been a nice increase. Will it continue. I think Molly just bought the July 125 calls for $1.75. This is a cram-play. She only bought two contracts, or $350. I think she's going for a double. I don't know where the sell point is, but a double would be nice. Again the split is tomorrow, the expiration for July is next Friday, the 15th.
Watch and learn. It's fun to learn at someone else's expense.
Thought for the day: "It's a wise person who realizes the need for an extra, independent source of income." I add, wiser yet, if that person gains the skills to accomplish this.
Tuesday, July 5, 2011
Woes of the Government Bailout
I write the following to share my conviction that government is the problem, not the solution. Do you remember just a few short years ago, the clamore (Indeed, the "Sky is Falling" rhetoric) that the world was in imminent danger unless the powers-that-be got Billions of Dollars and a huge regulatory over-haul of the financial system. It was called TARP. $700,000,000 was thrown at the problem. Now the Wall Street Journal writes: " . . . nearly three years after the panic of 2008, our all-seeing regulators have somehow not fixed what was arguably the single biggest justification for government intervention at the time."
What they regulated and what happened to the money was and is despicable. Proof? "Half the assets in U.S. prime money market funds were invested in European banks as of the end of May", according to Fitch Ratings. What? Our taxpayers have put up their hard-earned cash to bail out "our" financial crises and half of it ends up in Europe. Yes, the very Europe (Greece, Portugal, Spain, Ireland and others) that is in the news daily, with defaults, riots and bankruptcy looming. Did you know your money was going out of the United States for this? I guess our regulators were busy drafting new legislation of 2,300 pages (with 14 new felonies), most of which is to be determined by bureaucrats---un-named.
Again the Wall Street Journal States: "The real systemic risk is a U.S. government that has regulated and redistributed everything under the financial sun while choosing not to enact the reform that everyone knew had to get done." It didn't work, and now we find out that our money has flown the coop for Europe. Who's watching the watchers?
It gets worse. They then moved on to passing more regulation. Tim Geitner (Treasury Secretary) and others shouted that if only we passed the Dodd-Frank Bill, " . . . the days of crisis and bailout were over." What are they smoking? The Dodd-Frank monstrosity in many ways is more onerous, intrusive and bone-headed than ObamaCare, which defies credulity.
But they will pass it off, blame others and look the other way until it is too late.
Coming Up: I'm readying my notes on the three-pronged attack of Liberal tax strategies. Watch for it.
What they regulated and what happened to the money was and is despicable. Proof? "Half the assets in U.S. prime money market funds were invested in European banks as of the end of May", according to Fitch Ratings. What? Our taxpayers have put up their hard-earned cash to bail out "our" financial crises and half of it ends up in Europe. Yes, the very Europe (Greece, Portugal, Spain, Ireland and others) that is in the news daily, with defaults, riots and bankruptcy looming. Did you know your money was going out of the United States for this? I guess our regulators were busy drafting new legislation of 2,300 pages (with 14 new felonies), most of which is to be determined by bureaucrats---un-named.
Again the Wall Street Journal States: "The real systemic risk is a U.S. government that has regulated and redistributed everything under the financial sun while choosing not to enact the reform that everyone knew had to get done." It didn't work, and now we find out that our money has flown the coop for Europe. Who's watching the watchers?
It gets worse. They then moved on to passing more regulation. Tim Geitner (Treasury Secretary) and others shouted that if only we passed the Dodd-Frank Bill, " . . . the days of crisis and bailout were over." What are they smoking? The Dodd-Frank monstrosity in many ways is more onerous, intrusive and bone-headed than ObamaCare, which defies credulity.
But they will pass it off, blame others and look the other way until it is too late.
Coming Up: I'm readying my notes on the three-pronged attack of Liberal tax strategies. Watch for it.
Sunday, July 3, 2011
Options
As I mentioned in the last post this is not a great time for options---they seem to be stymied. However, when it comes to covered call writing, there are opportunities everywhere.
For example, awhile ago RenRen (Ticker: RENN), the company in China that wants to be China's Face Book, went public. It came out at around $12 to $14, I don't remember, and shot way up. Recently it backed off to $6.70. Maybe it went down because thru May the whole market went down, or maybe because of the bad news out of China (Accounting Procedures). I don't know, but it's moving back up.
Yesterday the stock was at $8.90. Now, in looking for a good covered call option, I look for an 8% to 10% option based on the stock price. This assumes that you're trying to sell an at-the-money or a near-the-money option. In this case $9. That would be around 70 to 90 cents. Lately we have to settle for 4% and 5%. Get this, the July (two weeks from now to the third Friday, July 15th) the options are 65 X 70 cents. You can put in a limit order to sell, but if you take the market price (the bid, or first number) you'd take in 65 cents, or $650, assuming you purchased 1,000 shares.
Look at the August Options. Yes, this is six weeks. They were $1.30 X $1.35. That's $1,300. Tell me where $8,900, or $4,450 on margin will earn you $1,300 for six weeks.
Now on to today. An expensive option like this (above 10%) sends up some warning flags. It shows a lot of volatility. However, we're headed into the summer rally, and this stock looks like it wants to go up. Earlier the stock was $9.15, already up from yesterday. The July $9 calls were 75 cents to sell. The August $9 calls were $1.35. It would have been better to do this trade yesterday. The option is only 5 cents higher, but the stock is up 25 cents. Still, an awesome amount of money.
I have a few more examples. I'll write later.
____________________________________
Answer to Question: Do I have to do trades on margin? Absolutely not. Don't do margin if you don't have to. Margin is a form of debt. Yes, you can double your cash returns, but you have to weigh it out and discuss this with your broker.
NOTE: I will be doing a Q & A and invite your questions or comments. We will probably divide these questions into topics and either make a book of them, or make them available in a more permanent site, say on the publisher's website.
LULU is doing a stock split (two for one) watch and learn. It splits next Friday. It has moved up from the high 80 dollar range to $114 today. It could move more, so watch it.
__________________________________________
Seek out your own financial professionals for trade suitability. Good Luck.
Wade
For example, awhile ago RenRen (Ticker: RENN), the company in China that wants to be China's Face Book, went public. It came out at around $12 to $14, I don't remember, and shot way up. Recently it backed off to $6.70. Maybe it went down because thru May the whole market went down, or maybe because of the bad news out of China (Accounting Procedures). I don't know, but it's moving back up.
Yesterday the stock was at $8.90. Now, in looking for a good covered call option, I look for an 8% to 10% option based on the stock price. This assumes that you're trying to sell an at-the-money or a near-the-money option. In this case $9. That would be around 70 to 90 cents. Lately we have to settle for 4% and 5%. Get this, the July (two weeks from now to the third Friday, July 15th) the options are 65 X 70 cents. You can put in a limit order to sell, but if you take the market price (the bid, or first number) you'd take in 65 cents, or $650, assuming you purchased 1,000 shares.
Look at the August Options. Yes, this is six weeks. They were $1.30 X $1.35. That's $1,300. Tell me where $8,900, or $4,450 on margin will earn you $1,300 for six weeks.
Now on to today. An expensive option like this (above 10%) sends up some warning flags. It shows a lot of volatility. However, we're headed into the summer rally, and this stock looks like it wants to go up. Earlier the stock was $9.15, already up from yesterday. The July $9 calls were 75 cents to sell. The August $9 calls were $1.35. It would have been better to do this trade yesterday. The option is only 5 cents higher, but the stock is up 25 cents. Still, an awesome amount of money.
I have a few more examples. I'll write later.
____________________________________
Answer to Question: Do I have to do trades on margin? Absolutely not. Don't do margin if you don't have to. Margin is a form of debt. Yes, you can double your cash returns, but you have to weigh it out and discuss this with your broker.
NOTE: I will be doing a Q & A and invite your questions or comments. We will probably divide these questions into topics and either make a book of them, or make them available in a more permanent site, say on the publisher's website.
LULU is doing a stock split (two for one) watch and learn. It splits next Friday. It has moved up from the high 80 dollar range to $114 today. It could move more, so watch it.
__________________________________________
Seek out your own financial professionals for trade suitability. Good Luck.
Wade
Friday, July 1, 2011
Covered Calls and LOCC
Disclaimer: The prices used in this blog post are a snapshot in time and are given for example purposes only. Do your own due diligence and research. Trading in the stock market can be risky. WBC
It's most difficult to just jump into a particular trade for generating cash flow. I get in letters and trades from all over the country. As this blog gets more popular---with questions, trades and examples---it will even be more fun.
This is not a great market for writing covered calls, but it is a good one. There are still some exciting deals out and about.
For example: Eastman Kodak (EK). The stock is $3.50 (it's down but they're coming up on the conclusion of a big lawsuit) and the July $3.50 call options are 35 cents to sell. Look at the numbers. 1,000 shares would cost $3,500, or $1,750 on margin. Sell the calls on a covered basis (you own the stock) and you'd take in $350. that's for the next two weeks. You would be agreeing to sell your stock for $3.50 (that's a break-even). There are some better ones, but this is not bad.
I always look at AMD, MU (these are both down right now) and some people have recently played TIVO. However, look at MBI. The stock was at $8.70 and the July $9 calls were 24 X 27 cents. The August $9 calls were 60 X 63 cents. Let's do the August for this paper-trade. Remember, prices here are a snapshot in time, and this is for educational purposes only. 1,000 shares would be $8,700, or $4,350 on margin. Sell the $9 calls for 60 cents, and take in $600. In writing a covered call you give away the upside movement of the stock---at least everything above $9.00 in this case. You get paid $600 to take on the obligation to sell your stock at $9.00, and just think if the stock goes to or above $9.00 and you get called out, you'll make another $300 ($9.00 [-] $8.70 = 30 cents X 1,000 = $300). Not bad for $4,350.
And don't forget about the "BUY-Back" which let's us end this trade and regain control of your stock. One more point. I wrote extensively on LOCC, or Large Option Covered Calls (my old book, "Free Stocks") and with some stocks this strategy is alive and well. It's for people who want to park some of their money and let it ride. Look at the $9 calls for Jan. 2012. They are going for $1.65 X $1.70. Again, a thousand shares, and you could sell the $9 calls out six months for $1,650. It's the little train that I said, "I can." It's the Chattanooga Choo-Choo. And think that's $1,650 in your account which could buy more stocks, apply toward your margin amount, etc. I'll be working with the publisher to update items in Free Stocks and combine it with other topics. Watch for it.
I also like LULU (Lululemon Athletica) right now. It's coming up on a 2:1 stock split, next week. Look at the options on RENN (RenRen). I'll write more on two or three more trades tomorrow. Please send your questions or comments.
Thanks, Wade
BLOG-MEISTER'S NOTE: The above covered call, used for generating monthly income, is explained in detail in "Stock Market Money Machine." This is a single topic book, by Wade Cook. You can order your copy at Amazon.com (E-Book) or Lulu.com (not the above LULU) for an e-book or a soft-bound book.
It's most difficult to just jump into a particular trade for generating cash flow. I get in letters and trades from all over the country. As this blog gets more popular---with questions, trades and examples---it will even be more fun.
This is not a great market for writing covered calls, but it is a good one. There are still some exciting deals out and about.
For example: Eastman Kodak (EK). The stock is $3.50 (it's down but they're coming up on the conclusion of a big lawsuit) and the July $3.50 call options are 35 cents to sell. Look at the numbers. 1,000 shares would cost $3,500, or $1,750 on margin. Sell the calls on a covered basis (you own the stock) and you'd take in $350. that's for the next two weeks. You would be agreeing to sell your stock for $3.50 (that's a break-even). There are some better ones, but this is not bad.
I always look at AMD, MU (these are both down right now) and some people have recently played TIVO. However, look at MBI. The stock was at $8.70 and the July $9 calls were 24 X 27 cents. The August $9 calls were 60 X 63 cents. Let's do the August for this paper-trade. Remember, prices here are a snapshot in time, and this is for educational purposes only. 1,000 shares would be $8,700, or $4,350 on margin. Sell the $9 calls for 60 cents, and take in $600. In writing a covered call you give away the upside movement of the stock---at least everything above $9.00 in this case. You get paid $600 to take on the obligation to sell your stock at $9.00, and just think if the stock goes to or above $9.00 and you get called out, you'll make another $300 ($9.00 [-] $8.70 = 30 cents X 1,000 = $300). Not bad for $4,350.
And don't forget about the "BUY-Back" which let's us end this trade and regain control of your stock. One more point. I wrote extensively on LOCC, or Large Option Covered Calls (my old book, "Free Stocks") and with some stocks this strategy is alive and well. It's for people who want to park some of their money and let it ride. Look at the $9 calls for Jan. 2012. They are going for $1.65 X $1.70. Again, a thousand shares, and you could sell the $9 calls out six months for $1,650. It's the little train that I said, "I can." It's the Chattanooga Choo-Choo. And think that's $1,650 in your account which could buy more stocks, apply toward your margin amount, etc. I'll be working with the publisher to update items in Free Stocks and combine it with other topics. Watch for it.
I also like LULU (Lululemon Athletica) right now. It's coming up on a 2:1 stock split, next week. Look at the options on RENN (RenRen). I'll write more on two or three more trades tomorrow. Please send your questions or comments.
Thanks, Wade
BLOG-MEISTER'S NOTE: The above covered call, used for generating monthly income, is explained in detail in "Stock Market Money Machine." This is a single topic book, by Wade Cook. You can order your copy at Amazon.com (E-Book) or Lulu.com (not the above LULU) for an e-book or a soft-bound book.
Subscribe to:
Posts (Atom)