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Posts Tagged ‘options strategy’

List of Available Weekly Options

 

LIST OF AVAILABLE WEEKLYS OPTIONS (last updated October 26, 2011) – official
Note: CBOE Removed ElPaso Corp. (EP) and added Cree, Inc. (CREE)
Ticker Symbol Name Product Type

List Date

Expire Date

OEX S&P 100 Index (American style) Index, pm-settled, cash

20111027

20111104

XEO S&P 100 Index (European style) Index, pm-settled, cash

20111027

20111104

SPX* S&P 500 Index Index, pm-settled, cash

20111027

20111104

DJX Dow Jones Industrial Average Index, am-settled, cash

20111027

20111104

NDX Nasdaq-100 Index Index, am-settled, cash

20111027

20111104

RUT Russell 2000 Index Index, am-settled, cash

20111027

20111104

EEM iShares MSCI Emerging Markets Index ETF

20111027

20111104

EWZ iShares Brazil Index ETF ETF

20111027

20111104

FAS Direxionshares Daily Financial Bull 3X Shares ETF

20111027

20111104

FAZ Direxionshares Daily Financial Bear 3X Shares ETF

20111027

20111104

FXI Ishares FTSE/Xinhua China Index Fund ETF

20111027

20111104

GLD SPDR Gold Trust ETF

20111027

20111104

GDX Market Vectors Gold Miner ETF ETF

20111027

20111104

IWM iShares Russell 2000 Index Fund ETF

20111027

20111104

QQQ Power Shares QQQ Trust ETF

20111027

20111104

SDS Proshares Ultra Short S&P 500 ETF

20111027

20111104

SPY S&P 500 Depository Receipts ETF

20111027

20111104

SLV iShares Silver Trust ETF

20111027

20111104

SSO Pro Shares Trust Ultra S&P 500 ETF

20111027

20111104

TBT Proshares Ultrashort Barclays 20+ Yr. Treasury ETF

20111027

20111104

TLT iShares Trust Barclays 20+ Yr. Treasury Bond Fd. ETF

20111027

20111104

TZA Direxion Daily Small Cap Bear 3X Shares ETF

20111027

20111104

USO United StatesOil Fund ETF

20111027

20111104

UNG United StatesNatural Gas Fund ETF

20111027

20111104

VXX iPath S&P 500 VIX Short-Term FT ETF

20111027

20111104

XLE Energy Sector SPDR ETF

20111027

20111104

XLF Financial Select Sector SPDR ETF

20111027

20111104

AA Alcoa Incorporated Equity

20111027

20111104

AAPL Apple Corporation Equity

20111027

20111104

ABX Barrick Gold Corp. Equity

20111027

20111104

AIG American International Group Equity

20111027

20111104

AMZN Amazon.com Inc Equity

20111027

20111104

AXP American Express Company Equity

20111027

20111104

BA Boeing Company Equity

20111027

20111104

BAC Bank of America Corp Equity

20111027

20111104

BIDU Baidu Inc. Equity

20111027

20111104

BP British Petroleum Equity

20111027

20111104

C Citigroup Equity

20111027

20111104

CAT Caterpillar Inc. Equity

20111027

20111104

CLF Cliffs Natural Resources Equity

20111027

20111104

CSCO Cisco SystemsInc. Equity

20111027

20111104

CREE Cree Inc. Equity

20111027

20111104

CRM Salesforce.com Inc. Equity

20111027

20111104

CVX Chevron Corp Equity

20111027

20111104

F Ford Motor Company Equity

20111027

20111104

FCX Freeport McMoran Copper CL B Equity

20111027

20111104

FFIV F5 Networks, Inc. Equity

20111027

20111104

FSLR First Solar Inc. Equity

20111027

20111104

GE General Electric Company Equity

20111027

20111104

GM General Motors Company Equity

20111027

20111104

GMCR Green Mountain Coffee Roasters Inc. Equity

20111027

20111104

GOOG Google Inc Equity

20111027

20111104

GS Goldman Sachs Group, Inc. Equity

20111027

20111104

HAL Halliburton Company Equity

20111027

20111104

HD Home Depot Inc. Equity

20111027

20111104

HPQ Hewlett-Packard Company Equity

20111027

20111104

HRBN Harbin Electric Inc. Equity

20111027

20111104

IBM International Business Machines Equity

20111027

20111104

IDCC InterDigital Inc. Equity

20111027

20111104

INTC Intel Corporation Equity

20111027

20111104

ISRG Intuitive Surgical Inc. Equity

20111027

20111104

JNJ Johnson and Johnson Equity

20111027

20111104

JPM J. P. Morgan Chase & Company Equity

20111027

20111104

KO Coca Cola Equity

20111027

20111104

LVS Las Vegas Sands Corp. Equity

20111027

20111104

MA MasterCard Inc. Equity

20111027

20111104

MCD McDonalds Corp. Equity

20111027

20111104

MCP Molycorp, Inc. Equity

20111027

20111104

MGM MGM Resorts International Equity

20111027

20111104

MMM 3M Company Equity

20111027

20111104

MOS Mosaic Company Equity

20111027

20111104

MRVL Marvel Technology Equity

20111027

20111104

MSFT Microsoft Corporation Equity

20111027

20111104

MU Micron Technology Inc. Equity

20111027

20111104

NEM Newmont Mining Corporation Equity

20111027

20111104

NFLX NetFlix Inc. Equity

20111027

20111104

NKE Nike Inc. Equity

20111027

20111104

NVDA Nvidia Corp. Equity

20111027

20111104

ORCL Oracle Corporation Equity

20111027

20111104

PCLN Priceline.com Inc. (new) Equity

20111027

20111104

PCX Patriot Coal Corp. Equity

20111027

20111104

SINA Sina Corporation Equity

20111027

20111104

POT Potash Corp Saskatchewan Equity

20111027

20111104

QCOM Qualcomm Inc. Equity

20111027

20111104

RIMM Research in Motion Limited Equity

20111027

20111104

RMBS Rambus Inc. Equity

20111027

20111104

S Sprint Nextel Corp. Equity

20111027

20111104

SLB Schlumberger Ltd. Equity

20111027

20111104

SLW Silver Wheaton Corp. Equity

20111027

20111104

SNDK SanDisk Corp. Equity

20111027

20111104

SU Suncor Energy Inc. Equity

20111027

20111104

UTX United Technologies Corp. Equity

20111027

20111104

V Visa, Inc. Equity

20111027

20111104

WFC Wells Fargo & Co. Equity

20111027

20111104

WLT Walter Energy Equity

20111027

20111104

WMB Williams Companies Equity

20111027

20111104

WMT Walmart Equity

20111027

20111104

WYNN Wynn Resorts Ltd. Equity

20111027

20111104

X United States Steel Corp. Equity

20111027

20111104

XOM Exxon Mobil Corp Equity

20111027

20111104

YHOO Yahoo Inc Equity

20111027

20111104

* S&P 500 Index (“SPX”) Weekly options trade on CBOE with PM settlement and are listed under the root ticker symbol, “SPXW”
and are commonly included in SPX (traditional) options chains which are AM settled. Separately, the C2 Options Exchange lists
S&P 500 Index options with PM settlement, under the ticker symbol SPXPM, that expire on the same Friday of the month as
traditional SPX options that trade on CBOE.

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Get Rich Monthly Income is Star Award Finalist

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Calendar Spread on Kinder Morgan (KMP)

STRATEGY DISCUSSION: Kinder Morgan (NYSE: KMP) ended the last trading session at $76.34. So far the stock has hit a 52-week low of $63.42 and 52-week high of $78.00. KMP has had an S&P 5 STARS (out of 5) ranking since 8/23/2007.  On 4/21/2011 S&P equity analysts set a 12-Month price target of $88.00 for the stock. Kinder Morgan stock has been showing support around $75.18 and resistance in the $76.98 range. KMP is part of the S&P 5 STARS stock list.  A way to play this stock would be with a calendar spread that substitutes a longer term call option in place of the covered call stock purchase. To use this strategy consider going long the KMP Jan ’13 67.50 Call and selling the Jan ’12 75 call for a $6.00 debit. The strategy has an 82 day life and would provide 3.72% downside protection and a 25.00% assigned return rate for an 111.28% annualized return rate (for comparison purposes only). This strategy has a 3 Key (out of 5) Moderate Relative Risk ranking.  Kinder Morgan has a current annual dividend yield of 5.91%.

TRADE: A CALENDAR SPREAD that involves selling the January ’12 75 call and buying the January ’13 67.50 call should cost $66.89 less per share than the covered call and potentially yield a 25% return if the stock stays above $75 through expiration.  S&P set a $88.00 12-Month price target for KMP which is currently trading at $11.66 below that target.  With the calendar spread trade, the trade cost could be reduced and returns potentially improved if the stock stays above $73.55 but lower than $95.43.

RISK: The Calendar spread strategy will normally carry more risk than a covered call strategy, but the rate of return is generally higher, since there is a lower capital outlay. At a 3 Key risk ranking this strategy is considered to have moderate relative risk. If the stock price at expiration is below $75 this strategy will not generate the potential returns shown. Another risk for this strategy is related to the bought Call Option price.  If the stock drops in price between now and expiration date, there is a possibility that the Jan ’13 67.50 call could drop quickly.

Get more calendar spreads.

Kinder Morgan Energy Partners Stock Chart

Kinder Morgan Energy Partners Stock Chart by YCharts

Want To Create A Second Income?

Louisville, KY, October 28 2011 – Get Rich Investments, an online leader in helping individuals to create income producing investments, has a newsletter to guide investors seeking a second income.  This is one of the most valuable tools for investors to learn how to create monthly income from stocks and option strategies.

Does the idea of using an income investing strategy to create a second income every month on your funds appeal to you?  Get Rich Investments has created the Get Rich Monthly Income Plan to teach individuals how to create multiple streams of investing income.  This is a low-cost newsletter providing the following services:

    1. A list of CEFs (closed-end funds) that pay monthly dividends month after month. These investments can pay more than 10% annually and can sometimes be purchased at a discount to net asset value.
    2. A list of covered call trades consisting of high quality stocks such as the S&P 5-star research rating of the best stocks that are recommended as strong buys. These lists are updated each week with select trades added daily.
    3. Low risk investments to minimize market risk and to prevent your portfolio from taking a big lost in such uncertain market environments like we are experiencing today.
    4. We have created a strategy called the Blanket Put that will protect your investment from market downturns. The Blanket Put is your safety blanket to protect your portfolio from market downturns. This is worth the membership fee by itself.
    5. Access to multiple education resources to better learn how to be a more successful investor. Trades don’t end when you make a stock buy, sell a call, or complete the trade. Here we want members to be educated about how to manage a trade and when to take action.

The Get Rich Monthly Income Plan diversifies risk by seeking multiple streams of income. You can create monthly income by: covered call trades, covered LEAPS, calendar spread trades, monthly dividend CEFs and dividends from owning high quality, conservative stocks. That is 5 streams of income from this simple list as we focus on “cash flow” to the investor to improve your quality of life.

We have more than 20 years experience in the markets including trading covered calls and monthly income investments.  In addition, we have Masters in Business Administration (MBA) from a top business school and other experience in corporate finance and strategy.  We have authored several books including the original Get Rich – Stay Rich: Investing for Monthly Income that is currently on sale at Amazon and other bookstores around the world. It is important to you that your monthly income is in qualified, experienced investor hands who can be trusted to deliver the best trades.

Learn more about investing for income.

The Best Method for Call Writing

Most experts in the stock market will generally say, “the writer of an options is foregoing any increase in stock price that exceed the strike price for the premium received when selling calls.  The option writer continues to bear the risk of a sharp decline in the price of the stock. The cash premium will only offset this loss.”  Do you buy into this way of thinking?  This is not correct based on how I trade covered calls.

With my method, you no longer care about the price of the stock that you purchased.  When the stock does go down, we would buy back the option at an inexpensive cost and immediately write a new option.  For example, we received a premium of $3.00 and close it at $0.25 when the stock price drops.  If the stock price went down $5.00, we would write a new call at at a $5 lower strike price.  This may net an addition premium of $3.00 so when you add the premiums minus the buy back of the first option we have $5.75 while the stock only dropped $5.00.  The second premium helped to offset the loss from the strike price.

When the stock does not reach the strike price, let the option expire, keep the premium, and write a new cal at the same strike price.  When the stock price goes above the call strike price, buy back the call option and write a new option at a higher strike price to reflect the gain in the stock. the second premium will help defray the cost of the buyback while you have a gain in the stock price.

For the buyer, options are a wasting asset as time decay erodes value.  The time value portion of a option is always zero at expiration.  Selling the time value repeatedly on the same stock makes option income work for you.

With my trading method, you will not be waiting on the stock price to go up to make money.  You will make money on the wasting time value of options you have sold.  this will change your investing philosophy about the stock market.

Covered Call Options Strategy for United Parcel Services (UPS)

Today’s covered call trade is on United Parcel Services (UPS) that reported better than expected earnings on 10/24/2011.

United Parcel Service Inc. (UPS) reported a 5.1% increase in third-quarter earnings Tuesday that topped Wall Street’s profit forecast, although overall package volume was stagnant due to a downturn in Asian exports and slack U.S. demand.  Executives of the Atlanta-based shipping giant voiced cautious optimism for the fourth quarter nonetheless, saying that the U.S. economy appears to have stabilized and noting that Asian imports could increase in the weeks leading up to the holidays if U.S. consumer confidence improves.

OPTION STRATEGY:

Look at the December 2011 70 covered call. For each 100 shares of United Parcel Service (UPS) stock you buy, sell one December 2011 70  covered call option for a 67.72 (69.57 – 1.85) debit or better.  That’s potentially a 3.37% assigned return in 52 days for an anualized return of 23.7%.  This stock also pays a dividend which may add another 0.8% to the return. The stocks next ex-dividend date is 11/08/2011.

TECHNICALS:

The technicals for UPS are bullish with a weak upward trend.  The stock is under accumulation with support at 67.61.  S&P rates this stock 4 STARS (out of five) – buy.

STOCK RISK PROTECTION:  For those wishing to add more downside protection, buy the April 2012 67.5 put for 4.40.  Sell the put when you exit the covered call trade.

S&P RESEARCH NOTES:

S&P reiterates buy opinion on shares of United Parcel Service (UPS) . Q3 EPS of $1.06, vs. $0.93, misses our $1.10 estimate, but is $0.01 above the Capital IQ consensus forecast.  UPS saw slowing international volumes and flat U.S. volumes, but offset this with higher yields and fixed cost leverage.  UPS reaffirms prior ’11 EPS guidance of $4.15-$4.40.  We trim our ’11 and ’12 EPS estimates to $4.30 and $4.90, from $4.35 and $5.00.  We keep our 12-month target price at $95, 19X our ’12 EPS estimate, and in the middle of UPS’ 5-year historical P/E range.  We still think UPS is well positioned for an eventual rebound in the global economy.

UPS Option strategy

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Covered Call Write on Caterpillar (CAT)

Caterpillar (CAT) reported blow-out earnings on October 24. CAT jumped 5.7 percent to $92.39 and led the Dow higher after the heavy equipment maker reported a quarterly profit that topped estimates on record revenues. Excluding the impacts of the recent acquisition of Bucyrus International, profit was $1.93 per share, up 58 percent from a year ago. Sales and revenues excluding Bucyrus were $14.581 billion, up 31 percent from the third quarter of 2010. Excluding the impacts of Bucyrus, it was an all-time record quarter for both sales and revenues and profit.

STRATEGY: Look at the December 2011 92.50 covered call. For each 100 shares of Caterpillar (CAT) stock you buy, sell one December 2011 92.50 covered call option for a $88.85 (92.35 – 3.50) debit or better. That’s potentially a 4.11% assigned return in 25 days or a whopping 60% annualized return.

TECHNICALS: The technicals for CAT are bullish with a possible trend reversal. The stock is under accumulation with support at 80.76. S&P rates this stock 4 STARS (out of five) – buy.

RISK: The stock has to drop 3.8% to threaten the breakeven point.

PROTECTIVE PUT: For those wishing to protect your downside, buy the May 2012 90 put for $10.35. Buy one put for each 100 shares of stock you own. Sell the put when you exit the covered call trade.

S&P RESEARCH NOTES: S&P reiterates buy opinion on shares of Caterpillar (CAT) . Q3 adjusted EPS of $1.93, vs. $1.22, beats our forecast by $0.19. Revenue gain of 41% was above our 36% forecast, on higher demand in almost all products and geographies. Record Q3 sales and profit results were particularly impressive to us in light of economic challenges in developed nations. CAT’s current trends also lead us to expect ongoing demand growth in ’12. We lift our ’11 EPS estimate $0.05 to $7.35, and ’12’s by $0.10 to $9.20. In light of growing economic uncertainties, however, we trim our target price by $13 to $129, on our revised historical P/E analysis.

Performance of Caterpillar (CAT) stock

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How To Make Money On Stagnate Stocks

After bottoming out in March 2009, the equities market bounced back with an impressive two-year march higher. But faster than you can say “Happy birthday, bull market,” violent clashes in the Middle East and utter devastation in Japan sent stocks reeling over a matter of mere weeks.
So, if you’re like most U.S. investors, you’ve probably got quite a few stocks in your portfolio that are now trading below freshly tagged multi-year highs. Since previous price peaks can act as areas of technical resistance, it’s only natural to be concerned about a forthcoming period of consolidation. Or, to be brutally honest — stagnation.

Fortunately, there’s a simple option strategy any investor can use to generate immediate income on his equity investments — even during those frustrating times when the market is grinding sideways.

A covered call is an option that you sell (or write) on a stock that you’re holding in your portfolio. By selling to open one call option, you’re accepting the obligation to deliver 100 shares of the underlying equity at the strike price of the option, should the stock price surpass the strike price, prior to the contract’s expiration date (in other words, should the option go “in the money”).

To build your cash-collecting call trade, take a look at a price chart of the security in question. You’ll need to pinpoint where you expect the shares to find resistance, because the strike price of your sold call(s) should generally correlate with this price zone.

In the best-case scenario, you want your sold call to expire worthless — or “out of the money” — so that you can (a) retain the entire premium received as pure profit; and (b) avoid taking any further action to close out the trade, which would rack up additional brokerage costs.

On the other hand, a call that’s too far away from the stock’s current price will barely be worth the effort. To see what we mean, simply check out the option chain of any given stock. As your eye travels over higher and higher strike prices, you’ll see the premiums begin to vanish.

Luckily, in the age of 1-point and 2.50-point strike prices for many popular stocks, it’s much easier than ever before to find a happy medium for your focus strike.

Once you’ve selected your ideal strike price, you’ll want to narrow your focus to shorter-term options. The comparatively richer option premiums of longer-dated contracts may be tempting, but trust us — the covered call strategy is best conducted over a relatively narrow window of time.

Put simply: The shorter the time frame of your trade, the less opportunity the shares have to rally above your focus strike. Plus, the effects of time decay are more pronounced on options that are closer to expiration — and in an option-writing strategy, time decay is your best friend. As the contracts shed their time value at an accelerating pace, they’ll naturally decline in price. This means the calls will be cheaper to buy back in the event that you should decide to liquidate your position ahead of expiration.

Investors should also be aware of the stock’s historical volatility, particularly as it relates to the option’s implied volatility. Equities with relatively low historical volatility (that is, slow-moving stocks) are attractive covered call candidates, because it suggests a relatively low probability of drastic price swings that could put you at risk of assignment. When implied volatility is inflated relative to historical volatility, it points to prime premium-selling opportunities.

On that same note, though, don’t forget to check the corporate calendar. A looming event, such as an earnings report or product launch, could be the underlying cause of inflated volatility. These events can often translate to significant price changes in the underlying stock, which raises the risk profile of a sold call position.

So, having selected an appropriate strike price and expiration month, your next responsibility is to place the trade with your broker. In order to make sure this is a covered call, be sure you sell no more than one option contract for every 100 shares of stock you own. Pocket your premium, and then sit back and wait for the options to expire worthless, as you predicted.

However, following a two-year rise in the broader equities market, it’s quite possible that you’re holding a few stocks in your portfolio that have delivered healthy returns. If you’re satisfied with the gains you’ve collected and are ready to move your investing capital elsewhere, writing covered calls is a savvy way to “get paid to get out.”

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