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Covered Call Trades of the Month

Investors have been bracing for anything that could reverse at the last minute the market’s year-long rally, which saw the Dow and S&P 500 hit record highs again this week. The S&P 500 is up 26 percent this year and registered a sixth week of gains on Friday.  However, income investors seeking to trade covered call investments have been performing well too.

Below are two successful trades from the past month listed in the Monthly Income Plan at getrichinvestments.com .  Each month, income investors are creating income streams from selling covered call options against high quality stocks.  Here are some winning trades from the current newsletter:

Covered Call on USG Corp (USG)

STRATEGY: Look at the Nov 27 covered call. For each 100 shares of USG stock you buy, sell one Nov 27 covered call option for a $25.50 ($26.65 – $1.15) debit or better.

Actions: USG is currently trading at $27.66 at the close on 11/15 so the 27 call we sold is ITM.  These shares and call options will be called away.

This is a 5.88% return for one month and an estimated 70% annualized return.

 

Covered Call on Flour Corp (FLR)

 

STRATEGY: Look at the November 2013 77.5 covered call. For each 100 shares of FLR stock you buy, sell one Nov 2013 77.5 covered call option for a $74.89 (77.19 – 2.30) debit or better.  That’s potentially a 3.49% assigned return.

Actions: FLR is currently trading at $79.36 so the 77.5 call we sold is ITM.  These shares and call options will be called away on Friday (11/15).

This is a 3.49% return for one month and an estimated 42% annualized return.

Covered Call Trades for June 2011

Below is the covered call trades for the June 2011 call options.  You purchase 100 shares of stock and sell 1 call for the covered call trade.  You can sell the at-the-money call (ATM) or you can sell one strike price below market price for a more conservative covered call.  The table provides the prices and volatility for the ATM strike prices.

Click to enlarge

 

MetroPCS Communications, Inc. (PCS) is a wireless telecommunications provider in the United States measured by the number of subscribers served. The Company offers wireless broadband mobile services under the MetroPCS brand in selected metropolitan areas in the United States. The Company provides a variety of wireless communications services to its subscribers on a no long-term contract, paid-in-advance basis. As of December 31, 2010, the Company had approximately 8.1 million subscribers. Its products and services include voice services, data services, custom calling features and advanced handsets. At December 31, 2010, the Company had thirteen operating segments based on geographic regions within the United States: Atlanta, Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco and Tampa/Sarasota.
Microsemi Corporation (MSCC) is a designer, manufacturer and marketer of analog and mixed-signal integrated circuits and semiconductors. The Company’s semiconductors manage and control or regulate power, protect against transient voltage spikes and transmit, receive and amplify signals. Its products include individual components, as well as integrated circuit solutions. During fiscal year ended October 3, 2010 (fiscal 2010), the Company completed the acquisition of White Electronic Designs Corporation (White Electronic). During fiscal 2010, the Company completed the acquisition of VT Silicon, a designer and manufacturer of multi-band radio frequency integrated circuit (RFIC) solutions for the mobile wireless broadband market, During fiscal 2010, it acquired Arxan Defense Systems, Inc., a provider of anti-tamper solutions, providing full-service support to defense clients in securing systems against tampering, piracy and reverse engineering.
Chico’s FAS, Inc.  (CHS) is a specialty retailer of private branded, casual-to-dressy clothing, intimates, complementary accessories, and other non-clothing gift items under the Chico’s, White House |Black Market (WH|BM) and Soma Intimates (Soma) brand names. As of January 30, 2010, the Company operated 1,080 stores across 48 states, the District of Columbia, Puerto Rico and the Virgin Islands and e-commerce Websites for each of its brands. The Chico’s brand sells designed, private branded clothing focusing on women 35 and over with a moderate to high income level. The Chico’s brand controls the design process, including choices of pattern, prints, construction, design specifications, fabric, finishes and color through in-house designers, purchased designs, and working with its independent suppliers to develop designs.
Xerox Corporation (XRX) provides a portfolio of document technology, services and software, and the diverse array of business process and information technology (IT) outsourcing support. The Company has three segments: Technology, Services and Others. Technology includes the sale of products and supplies, as well as the associated technical service and financing of those products. the Company’s Services segment is consists of business process outsourcing, information technology outsourcing and document outsourcing services. The Company sells its products and services directly to customers through its world-wide sales force and through a network of independent agents, dealers, value-added resellers, systems integrators and the Web. In Europe, Africa, the Middle East and parts of Asia, the Company distribute its products through Xerox Limited.
USG Corporation (USG), through its subsidiaries, is a manufacturer and distributor of building materials, producing a range of products for use in new residential, new nonresidential, and residential and nonresidential repair and remodel construction, as well as products used in certain industrial processes. The Company is organized into three reportable segments: North American Gypsum, Building Products Distribution and Worldwide Ceilings, the net sales of which accounted for approximately 47%, 35% and 18%, respectively, of its consolidated net sales during the year ended December 31, 2009. North American Gypsum manufactures and markets gypsum and related products in the United States, Canada and Mexico. Building Products Distribution consists of L&W Supply, a specialty building products distribution business in the United States. Worldwide Ceilings segment manufactures and markets interior systems products worldwide.
Marvell Technology Group Ltd. (MRVL) is a fabless semiconductor provider of application-specific standard products. The Company develops complex system-on-a-chip (SoC) devices using its technology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing and embedded advanced RISC machine (ARM)-based microprocessor integrated circuits. The Company’s product portfolio includes devices for data storage, enterprise-class Ethernet data switching, Ethernet physical-layer transceivers (PHY), handheld cellular, Ethernet-based wireless networking, personal area networking, Ethernet-based personal computer (PC) connectivity, control plane communications controllers, video-image processing and power management solutions. Its products serve applications used in carrier, metropolitan, enterprise and PC-client data communications and storage systems. Additionally, it serves the consumer electronics market for the convergence of voice, video and data applications.
Newfield Exploration Company (NFX) is an independent oil and gas company engaged in the exploration, development and acquisition of oil and gas properties. The Company’s domestic areas of operation include the Mid-Continent, the Rocky Mountains, onshore Texas, Appalachia and the Gulf of Mexico. Internationally, the Company operates in Malaysia and China. Mid-Continent division is focused primarily in the Anadarko and Arkoma basins. Its Greater Monument Butte is the Greater Monument Butte field area, located in the Uinta Basin of Utah. During the year ended December 31, 2010, approximately 82% of its proved reserves and 90% of its probable reserves were located in resource plays, primarily in the Mid-Continent and the Rocky Mountains. As of December 31, 2010, Newfield had proved reserves of 3.7 one trillion cubic feet equivalent. On February 11, 2010, the Company acquired some of TXCO Resources Inc. (TXCO’s) assets in the Maverick Basin of southwest Texas.
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