Saturday, October 4, 2014

Investment Idea Sharing 4 Oct. 2014 - PUTs on EBAY & RIG

Investment Idea Sharing – Oct. 4, 2014: 
See below for my personal stock market Buys or Sells for this week:
Buy Stock: none
Sell Stock: none
Buy To Close Covered Call: STM
Sell Covered CALL: AEE, NOK
Buy to Close Cash Secured PUT: none
Sell Cash Secured PUT: EBAY, RIG
See more details on these transactions below the Weekly Summary table below.

This week I closed (Buy to Close) a CALL option on STM for $.10.  It did not expire until January 17, 2015, and was very far “Out of the Money” due to great stock price movement for STM after I had opened the position.  I sold Covered Calls on AEE and NOK as part of my strategy to generate steady revenue from my core holdings whenever they are near 52 week highs.  I sold a Cash Secured PUT on EBAY because it had high volatility after announcing it would spin off PayPal, and this caused their PUT option prices to go very high.  As RIG continues to go down along I am selling Cash Secured PUTs because I think the deepwater drillers are being overly punished by the stock market and I believe they will come back.  If RIG is put to me, they pay a 7% dividend and have good fundamental financial values.

Last week, most of the world market indices took a big 2% drop on Wednesday and Thursday, but recovered most of this drop on Friday to make the week almost no change from last week.  Pretty exciting to watch that drop happen!  Here is the story about the good unemployment and new job hires report that brought the market back on Friday:  https://finance.yahoo.com/news/unemployment-rate-falls-to-5-9---employers-hire-248-000-workers-140327159.html

I continue to look for stocks that have good fundamental financial values, but stock prices near 52 week lows.

Weekly Summary Table of Worldwide Market Index Closing values:


Here are my Stock BUYs for This Week:
Stock Symbol:
Buy Date:  
Buy Price:  
Target Sell Price:

Here are my Stock SELLs for This Week:
Stock Symbol:
Sell Date: 
Sell Price: 
Buy Price:  
Buy Date:  

Here are my Mutual Fund BUYs for This Week:
Fund Symbol:
Buy Date: 
Buy Price: 
Target Sell Price:

Here are my Option (CALL or PUT) Sells/Buys for This Week:
Option: Buy to Close Covered CALL 
Stock Symbol: STM
Original Sell to Open Date: 22 July 2014
Original Expiration Date:  Jan 17, 2015
Buy to Close Date: 1 Oct 2014
Strike Price: $10
Option Price:  $.10
I had bought these shares back in May 2013 and have sold Covered Calls on them several times since then.  STM pays a 4.5% dividend, but this year their profit dropped to a $-.18 / share, so their dividend is at risk.  They do have a chip in the new iPhone 6, so I am hoping that will bring them back to profitability.  But for now, their stock is so low that I was able to buy out of this CALL for only $.10 which gets me positioned for when STM comes back so I can sell another Covered CALL.
Here is the 5 year chart for STM:

Option: Sell to Open Covered CALL 
Stock Symbol: NOK
Sell to Open Date: 30 Sep 2014
Expiration Date:  15 Jan 2016
Strike Price: $10
Option Price:  $.70
I had bought these shares back in 23 Feb 2011 at $8.50.  After that, NOK had all kinds of problems and the stock went to $2 in 2012.  I believed in NOK and now they are at $8.28, so I can sell this $10 Covered CALL. 

Option: Sell to Open Covered CALL 
Stock Symbol: AEE
Sell to Open Date: 30 Sep 2014
Expiration Date:  20 Mar 2015
Strike Price: $40.00
Option Price:  $.85
I bought these shares on 12 Jan 2010 at $24.  They pay a great 4.2% dividend, but have hit a ceiling at $40 / share for the past year.  My prior Covered CALL at $40 expired in September, so I was happy they came back quickly so I could sell this next Covered CALL.

Option: Sell to Open Cash Secured PUT 
Stock Symbol: RIG
Sell to Open Date: 29 Sep 2014
Expiration Date:  15 Jan 2016
Strike Price: $33.00
Option Price: $6
This is the second PUT I have sold on RIG in the pst 3 months.  I sold a PUT in August on RIG at Strike of $38 for $3, but RIG continued to go down.  All of their competitors (NE, PGN, ESV) are also going down as the price of oil drops.  RIG fundamentals look good to me, so I am continuing to follow them down with these PUTs. 
Here is the 5 year chart for RIG:

Option: Sell to Open Cash Secured PUT 
Stock Symbol: EBAY
Sell to Open Date: 30 Sep 2014
Expiration Date:  15 Jan 2016
Strike Price: $55.00
Option Price: $5.85
EBAY is not very close to their 52 week low, and their fundamental values are not as good as I prefer, but I decided to sell this Cash Secured PUT on EBAY because it had high volatility after announcing it would spin off PayPal, and this caused their PUT option prices to go very high. 
Here is the 5 year chart for EBAY:

Visit www.ultimatestockfinder.com to download our Stock Evaluator and Mutual Fund Evaluator spreadsheets, read training articles and check out all our web links for investing information.
NOTE: Spreadsheets will NOT be updated from Sept. 1 until Sept. 20 because I am on vacation.

StockEvaluator ‘Short List’
‘Short List’ screens using 12 fundamental value limits that I want to see in a stock before considering it as a possible buy. 

View our training video that shows how to enter your preferred values for each of these ‘Short List’ screening limits:

View the Stock Evaluator ‘Short List’ screening criteria and target limit values here: http://www.ultimatestockfinder.com/short_list_12_criteria.JPG

Mutual Fund Evaluator ‘Short List’

View the Mutual Fund Evaluator ‘Short List’ screening criteria and target limit values here:

Please remember to send me any other investing ideas, information or questions that you want to share with the group.

There will be no newsletter next week (Oct 11) because I will be on vacation.

Thanks,
John D.

Disclosure: The author has no positions in any of the stocks or mutual funds mentioned in this article unless clearly stated above. We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article.  Please see our full legal disclaimer at:  http://www.ultimatestockfinder.com/stockevaluator_disclaimer.html
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