Financial Solution News

Barron’s had an article this weekend that highlighted the prospects of TD Ameritrade Holding Corp (NASDAQ: AMTD).  AMTD closed on Friday at 15.79.  I agree that the downside is limited due to potential merger activity, but looking at the chart AMTD is below its 10, 50 and 100 day moving averages.  Only the 20 day could provide support and it doesn’t show a history of caring about the 20 day.  In addition, when charting the trend lines you see the lows getting lower and highs getting lower.  AMTD is almost dead center between the falling upper trend line and lower trend line.  While AMTD could reach back for the upper line again soon, the lower line is where I’m going to be targeting to sell some naked puts.  If AMTD drops below 15, the near term puts should jump due to both added intrinsic value and increased volatility. Going back [...]

Original post by Alex Fotopoulos

I just added a new spreadsheet to my Excel Spreadsheets page. I use this one to help me track my ROI in two ways when writing naked puts.

The top section shows me what I have in play now.  This data shows what type of return I expect to get on each individual trade and what annualized return my current holdings should return.
I review every option using the premium, strike, number of contracts and time remaining to determine what my Return on Investment (ROI) will be.  When analyzing each option contract I compare which strike and premium is the best choice for me.  If the underlying stock is highly volatile, I can easily see that selling puts well out of the money provides a return I can be happy with for the reduced risk.  If the underlying stock is not very volatile, I can easily see that I need to skip it and move [...]

Original post by Alex Fotopoulos

One of the most important first steps for a beginning trader or investor to make is to have money to invest.  That may sound like it is too simple to consider, but many potential investors spend more time wishing they could invest rather than doing something about it.  “You have to have money to make money” is a cliché because it tends to be true and therefore people repeat it often.  Focusing on having money to invest must be the true first step.  While studying the basics of how to invest, where to invest and what to invest in, an investor must spend time saving, but only if a goal is well planned will an investor meet those goals sooner.
More than anyone, beginning investors must pick their focus and stay with it.  Splitting financial goals will slow your progress and make it so you don’t see the progress as much. [...]

Original post by Alex Fotopoulos

AAPL (Apple, Inc) is off its highs from late last month and seems to be finding support just above 90.  The long term trend line for AAPL points up using the lows from August, late February and this week.  Also, using the high from October and the lows from February might provide further support around 84.  The 50 day and 100 day moving averages are also showing support just below 90.  To double check me, I looked at schaeffersresearch.com where I see AAPL they rate it 7.  That’s another good sign as I have had success coupling Schaeffer’s ratings with my charting and fundamental research. 
Speaking of fundamentals, AAPL has no debt.  YoY quarterly growth is outstanding, but I can’t imagine it being sustained at that rate though.  Based on projected earnings, the forward p/e is only 23.16.  This puts the p/e in the historically low range according to the Ford [...]

Original post by Alex Fotopoulos

April options expire on Friday, giving three trading days for me to wait and see how I’ll fair.  I keep an eye on my portfolio daily, but a week before expiration I can get a better idea what I’ll be dealing with after expiration.  I didn’t have access to a computer for the past four days due to my wife being in the hospital.  She’s out now and better, so it’s my opportunity to return to trying to grow our nest egg.
For this drill I’m only reviewing April options.
I sold 2 QCOM Apr 40 Puts and QCOM is at 43.37 making me feel safe
I sold 2 AA Apr 32.5 Puts and AA is at 34.77 making me feel safe
I sold 3 CSCO Apr 25 Covered Calls and CSCO is at 26.84 making me think I’ll go ahead and take my losses on this poorly executed trade
I sold 1 NE Apr [...]

Original post by Alex Fotopoulos

Barron’s had an article in the April 2nd issue on page 44 that covered the thoughts of Larry Jeddeloh, founder of an independent research service, TIS Group.  Jeddeloh is calling for a 15-20% pull back this year in all indexes.  He makes some valid points for why this could be coming.  The usual suspects are all there, rising energy prices, slowing growth and inflation.  All of that coupled with the sub-prime lending woes could spell a deeper pull back than we felt in Feb. Basically, Jeddeloh thinks the Feb pull back wasn’t deep enough and the optimism that sprung back in March is just making it worse. 
I agree with that theory that people start feeling invincible when they find they can recover their losses in 2 months.  That makes the risk not so scary and emotion starts beating out logic.  It was perfect for me as a someone who writes [...]

Original post by Alex Fotopoulos

As I predicted in my post from a few days ago, TV has dropped below 30.  The May 30 put jumped 25% to $1.00.  I think it might have a little more room to drop now that TV has dropped below its 10 day moving average.  This one is worth watching since I think it’s still going to be a good long term investment.  Now might not even be a bad time to sell the May option slightly ITM, but I’m waiting to see how it reacts to its 20 day moving average.

Original post by Alex Fotopoulos

I just added a Profit/Loss Tracking Microsoft Excel spreadsheet to my Excel Spreadsheets page.  I use it as my view of gains plus industry breakdown of holdings along with my profit or loss tallies per stock.  I use Yahoo! for all information on industries and sub-industries. 
I find it vital as part of my trader’s journal to track where I am, not just per stock, but also how each option trade is flowing.  Some positions can take six months or more from start to end and without tracking each trade from selling puts and then having the stock assigned to me and finally to selling a covered call on it, I found it too easy to loose track of where I was.  At the same time, having the view at the top of my monthly progress helps remind me that it’s the big picture that matters.  Losing money on one option trade doesn’t mean [...]

Original post by Alex Fotopoulos

In a May 2007 “Smart Money” magazine article by Jack Hough, he lists 7 stocks, 5 with tickers and only 3 of those are optionable.  This is my take on those three.
VOXX – schaeffersresearch.com rates it 7 – No Puts listed, at least not in Ameritrade, call premiums look decent if someone likes covered calls. Yahoo shows puts, but not for May.  My research stopped when I saw no puts were available for me to trade on.
TV – schaeffersresearch.com rates it 6, good put premiums, but the chart doesn’t work for me yet.  The potential trend lines I draw show a possible dip of at least a dollar to around $29.50, if not all the way down to $27.50.  TV’s first moving average line to possibly provide support is the 10 day at 30.00, followed by the 20 day around 29.20.  Both of those mean the best I’ll consider is [...]

Original post by Alex Fotopoulos

 
My portfolio balance is $43,573.16 and is comprised of a cash balance of $4,326.13 and the following positions.  If all open puts are assigned and none of the calls are exercised, I’ll have an account that is around 55% on margin.  With options expiration only two weeks away I feel fairly confident that not all puts will be assigned, if any.
OPTIONS
Trade Date      Stock           Expires       Strike            # contracts
3/19/2007         SLB             May Call      $67.50            1
3/19/2007         CMCSA        May Call      $27.50            3
4/4/2007           MA              May Put       $105.00          1
3/8/2007           QCOM         April put       $40.00            2
3/8/2007           NE               April put       $67.50            1
3/1/2007           CSCO          April Call      $25.00            3
2/21 & 2/28      TPX              April Put      $25.00            4
2/20/2007         NYX             April Call      $95.00            1
2/20/2007         AAPL           April Call      $90.00            1
3/7/2007           AA               April Put      $32.50            2
3/8/2007           IACI             April put       $37.50            2
 
STOCKS
Qty – Symbol – Description
100 – AAPL – APPLE INC COM
300 – CMCSA – COMCAST CORP COM CL A
300 – CSCO – CISCO SYSTEMS INC COM
100 – NYX – [...]

Original post by Alex Fotopoulos