Improving Picture In China Could Benefit These 2 Cheap Large Cap Plays [View article]
I love LEAP bull call spreads on AAPL. At today's prices you can buy a January 2014 $510 / $515 spread for $2.23. If AAPL closes on January 18 2014 above $515 ($5 below current price), you'll net $2.77 or 122% annualized (not including expenses).
Nvidia Delivers Good News To Its Investors [View article]
.... and then the stock tanked 4%. This company has broken my heart (and bank) for years. Any idea why a stellar earnings report caused a sell-off? NVDA is a publicly traded pinata.
Greetings George - Very nice! Our investment strategies are similar.
Regarding your comment about selling calls into acute share strength and selling puts into acute share weakness: I often find nice opportunities, paradoxically, in selling calls into acute share weakness. For example, if I buy CMI shares today, and sell Nov 12 $87.50 calls, I'll earn 45% annualized with assignment or 35% annualized without assignment (or 29% / 24% with the Dec 12 $87.50 call). Those yields reflect either market inefficiency, or the expectation that the shares will recover.
Stocks That Avoid Unrecoverable Foreign Dividend Withholding In Tax Deferred Accounts [View article]
Richard - Great article as always, many thanks.
Regarding your statement that "U.S. investors can achieve some economic recapture of foreign tax withholding on their foreign dividend stocks through their U.S. tax returns." :
My understanding is that 100% of withheld foreign taxes can be claimed as a tax credit, unless earned in a tax-deferred account (depending on filer's income). Can you confirm?
Take Advantage Of Chesapeake's Woes With Covered Calls [View article]
In certain situations -- usually involving highly volatile stocks -- you can establish a covered call in which the strike price is lower than the purchase price, yet you make a profit if the shares are called away, because the premium you earned from selling the call exceeds the amount that you lose on the shares. This is known as "downside protection".
For example, if you buy 100 shares of CHK at $14.04, and sell a $13 June call, you'll actually earn an annualized yield of 96% if the shares are called away at $13. Why? Because you'll lose $1.04 on the shares, but earn $2.29 on the call. (Based on today's closing prices).
Sell Puts When There's Blood In The Streets [View article]
Greetings Adam - A more likely reason that a put buyer may take option #1 rather than #2 is ignorance: The put buyer may not understand that they can cut their losses a bit by buying the shares, then assigning them. Thanks for commenting. David
Taking A Stake In Natural Gas With Carbo Ceramics [View article]
Debra - Thanks for the article. I've watched CRR for a few years and don't know what to make of it as an investment. CRR was a high flier during 2010 and through mid-2011, then hit the skids (from approx. $180 to $100). Most fundamentals are quite healthy, yet short interest is a scary 37%. Any ideas what the bears are thinking?
Jaycee - Whether or not you need to cash-secure the put depends on the option trading level of your brokerage account. You'll need a level 3 account to avoid cash-secure requirement.
Investors' Primer For Kinder Morgan [View article]
Improving Picture In China Could Benefit These 2 Cheap Large Cap Plays [View article]
Nvidia Delivers Good News To Its Investors [View article]
The Cummins Massacre [View article]
Regarding your comment about selling calls into acute share strength and selling puts into acute share weakness: I often find nice opportunities, paradoxically, in selling calls into acute share weakness. For example, if I buy CMI shares today, and sell Nov 12 $87.50 calls, I'll earn 45% annualized with assignment or 35% annualized without assignment (or 29% / 24% with the Dec 12 $87.50 call). Those yields reflect either market inefficiency, or the expectation that the shares will recover.
Thanks,
David
Stocks That Avoid Unrecoverable Foreign Dividend Withholding In Tax Deferred Accounts [View article]
"Yes, you can take a foreign tax credit for the full amount of the tax. "
Stocks That Avoid Unrecoverable Foreign Dividend Withholding In Tax Deferred Accounts [View article]
Stocks That Avoid Unrecoverable Foreign Dividend Withholding In Tax Deferred Accounts [View article]
Regarding your statement that "U.S. investors can achieve some economic recapture of foreign tax withholding on their foreign dividend stocks through their U.S. tax returns." :
My understanding is that 100% of withheld foreign taxes can be claimed as a tax credit, unless earned in a tax-deferred account (depending on filer's income). Can you confirm?
Take Advantage Of Chesapeake's Woes With Covered Calls [View article]
For example, if you buy 100 shares of CHK at $14.04, and sell a $13 June call, you'll actually earn an annualized yield of 96% if the shares are called away at $13. Why? Because you'll lose $1.04 on the shares, but earn $2.29 on the call. (Based on today's closing prices).
Sell Puts When There's Blood In The Streets [View article]
#1 Let the option expire and lose $1.40, or;
#2 Buy shares at $47, sell them at $48 (by exercising the put) and lose $1.
By doing #2 rather than #1, the put buyer loses .40 less (in effect, a .40 "premium").
Sell Puts When There's Blood In The Streets [View article]
Sell Puts When There's Blood In The Streets [View article]
Telefonica A Long-Term Buy [View article]
Taking A Stake In Natural Gas With Carbo Ceramics [View article]
Taking A Stake In Natural Gas With Carbo Ceramics [View article]
Strangling Profit From CMI [View article]
Thanks for reading.
David