Jack Haddad's  Instablog

If you are searching for sotcks that had the least run relative to the rapid rise in the DOW Jones Index, consider the following:

1.  AMAT:  Shares remain depressed while implied option volatility indicate that shares will remain stable.  This is a good opportunity to buy shares and write calls against them to pocket a monthly premium.  I recommend the Nov strike 13 calls against the underlying shares.

2.  INTC:  While shares have surged from a one year support of 15.10, CEO Otollini has been very upbeat on Company's guidance.  They have exceeded the most conservative analyst forecast in earnings and 4th quarter guidance.  Shares are a buy at these levels.  I recommend writing Nov strike 20 calls as a hedge against the underlying shares.

3.  DOG; this is a very good index which shorts the DOW Jones.  You can buy shares and hedge them with Nov strike 55 calls.  This index is a perfect way to hedge your entire portfolio if you want ot safeguard long positions.


Disclaimer: MD CApital Management owns DOG, INTC, and AMAT

It's one thing for companies to be able to beat earnings estimates because of lower expenses and boosts to international profits because of the weak dollar. But until more companies are confident that demand in the United States is improving, be wary. The disconnect between Wall Street's elation about earnings and the average American's continued concerns about the economy as a matter of perception.

Dollar cost averaging on BAC is a great idea, now that shares have been stable.  Bought at 17.18 and wrote Nov strike 17 calls at .90/contract.  I will buy more at the proper support levels, if shares trend down.

 

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For that reason, I bought shares at 13.56 and wrote Nov strike 3 calls at .90/contract.  The premium from the calls provides not a only a good hedge against the underlying shares, but a good risk/reward monthly ratio.

 Added more shares at 13.73, and wrote Nov strike 12.50 calls at 1.61/contract.  Carl Ichan continues to charge forward with his plans and a San Francisco hedge fund has doubled its stake in the company.  

 

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 Added more shares at 20.26, and wrote Nov strike 17.50 calls at 3.10/contract.  This will give a downside protection to 17.10 should shares close below 17.50 by expiration.  If shares are above 17.50, .34/share in intrinsic time decay will be made-- which is a very good monthly return.