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John R. Conway

 
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  • New To Options? Consider The Deep In The Money Strategy [View article]
    I would agree with what Bill d wrote above. When looking at delta you want to get to close to (1) as possible, but being at 0.90 or above is pretty high delta. When you go that far down you sometimes don't get the volume because so little of these calls are traded.

    Selling puts is also a good strategy, but I just wanted to focus on one strategy for this article since this was intended for the beginning traders. On this strategy; I like to give myself a time frame of at least 6-12 months. I would stay away from the weeklys or front money options. Unless you get a big swing upward time decay is going to hurt, especially on a down day. By having a longer time frame you will have a better probability than a week or month to be profitable (not guaranteed of course) This trade (in my opinion) also works well stocks that are in a bullish upward channel and if you own shares, but are looking for a cheaper alternative to buying stock.
    Feb 1 07:43 PM | Likes Like |Link to Comment
  • New To Options? Consider The Deep In The Money Strategy [View article]
    To calculate your breakeven point on buying a call do the following:

    price of strike + price of option contract then take this figure and subtract from stock price to get your breakeven.

    So for example you mention above the spy 60 Dec 2014

    price of 60 Dec 2014 strike is 71.50 + option contract is 60

    71.50+60= 131.50

    Price of spy right now is about 131.12

    So, 131.50 - 131.12= 0.38 cents move upward to breakeven. This is of course if the option price stays here. If the option price moves down your amount needed to breakeven will be greater.

    The deep in the money option strategy is nothing new to options, just presenting an opportunity to not use as much cash as going out and buying stock. While there are advantages there are also disadvantages. Since you said your feeling a little leary, get your practice account ready and try practicing this strategy first. There are going to come times where you want to buy on the dips, track momentum and use a wide array of technical indicators. Also, in my opinion trading is very psychological and requires patience. A practice account is a good way to do this and getting used to the ups and downs of trading without risking any money.
    Jan 31 01:48 PM | Likes Like |Link to Comment
  • New To Options? Consider The Deep In The Money Strategy [View article]
    I believe what Probe1957 is saying is that when just looking at the types of trades that one can use with options. Just buying calls or puts are considered a low probability strategy. On the flip side if one wants a high probability strategy than covered calls, credit spreads and iron condors are high probabilty trades since you will be selling options in your strategy as opposed to just being a buyer.
    Jan 31 01:06 PM | Likes Like |Link to Comment
  • New To Options? Consider The Deep In The Money Strategy [View article]
    Probe1957,

    Your points are well taken and you're right options are not for everybody and this is why I stressed in the article use a practice portfolio.
    Jan 31 12:54 PM | Likes Like |Link to Comment
  • Will The Taco Bell Strategy Work For Yum Brands? [View article]
    I agree. I am going to generalize here, but when you go to a McDonald's or even Starbucks the one thing that I usually see (when I go for breakfast) is the older crowd gathering for breakfast or having their coffee and discussing the news while watching television. I understand that Taco Bell generally appeals to the younger crowd, but why not make a push to other age groups. Not everybody wants to grab their food and go. I actually enjoy going to McDonald's and Starbucks and getting on the internet and watching television. These places want you to stay. I'm not saying that Taco Bell wants you to grab your food and go, but just taking a look at how McDonald's has upgraded their restaurants and I believe Yum will eventually will follow if they want to capture a more diverse crowd.
    Jan 31 12:49 PM | 1 Like Like |Link to Comment
  • Will The Taco Bell Strategy Work For Yum Brands? [View article]
    Thank you for your comment and my apologies on missing the obvious sale of these two brands. I don't typically follow Yum brands and was going on what the company profile was on Yahoo and Cnbc. I just found the Taco Bell breakfast story interesting and is a place I go here and there. Here's a link that discusses the sale of A&W and Long John Silvers: http://bloom.bg/AyGsyR
    Jan 31 11:57 AM | Likes Like |Link to Comment
  • New To Options? Consider The Deep In The Money Strategy [View article]
    Thanks for your comment. Alcoa does pay a dividend. I think your looking at about 0.03 cents per quarter, so unless you hold lots of shares you're not going to get much in terms of dividends. Despite Alcoa being down about 1.5% (at the time I write this) your 5 dollar strike DITM calls (if they expire in April) are only down about 0.94% So while your losing some money you are currently performing just as if you owned the stock except for a cheaper cost.
    Jan 31 11:43 AM | Likes Like |Link to Comment
  • Alcoa, Century Aluminum Too Risky Given Macro Uncertainty [View article]
    Also, while high beta may scare some people away this can drive up the shares in a flash when you have a short squeeze coming (especially on a good day on the Dow) Alcoa has a little over 7% short interest. We have seen two short squeezes so far this year (SHLD & JCP) When one looks at other high beta stocks (GMCR, NFLX, GOOG, just a few for example) With the Beta that Alcoa has this is not a bad stock to own deep in the money calls on. If you take a look at other high beta stocks (GMCR, NFLX, GOOG just some for example) Just looking at putting on a high beta trade is going to cost you a lot more (for deep in the money calls or puts) than Alcoa. I agree with the comment above by
    YoYoYah1, "Aluminum pricing has shown the ability to turn on a dime and go up 20% to 30% in a matter of months. See chart here http://bit.ly/wzjXFn"

    When commodities start to turn bullish, Alcoa and others are stocks that can make fast moves upward. In my opinion Alcoa is a steal at 9, but at 10 I'm looking to average cost down and a good stock to buy on dips.
    Jan 28 03:44 AM | Likes Like |Link to Comment
  • Finding Hidden Value In SuperValu: Dividend Yield Too Good To Pass Up [View article]
    Also, from a technical level with the current dividend SVU is looking a little oversold. In a one year time frame it's RSI is getting close to 30 and the stock has bounced off the 6.60 level twice, both times making some decent gains. While SVU may not be the greatest investment, starting to look good from a speculative point of view.
    Jan 27 02:21 PM | Likes Like |Link to Comment
  • Finding Hidden Value In SuperValu: Dividend Yield Too Good To Pass Up [View article]
    Another thing to note about SVU is that when one looks at the grocery sector in my opinion SVU sits in the middle. They are not a dollar store like FDO or DG, nor they are not a retail/grocery store combination like a WMT, TGT or COST. SVU in my opinion is a play on increasing consumer discretionary income. This is one of the many ways one can see eps/revenue/profitability increase at SVU. There's to much competition from the grocery discounters and the big box retail/grocery combinations and with SVU sitting in the middle they have to be aggressive, otherwise being stuck in the middle is not a good thing.
    Jan 27 11:58 AM | Likes Like |Link to Comment
  • Alcoa, Century Aluminum Too Risky Given Macro Uncertainty [View article]
    In my opinion Alcoa is a stock that is always going to have ups and downs depending on the economy/market. Sometimes the problem with trading With Alcoa (in a way) you are betting that production, demand, supply, price of aluminum, etc will be will be continuing to work in Alcoa's favor and the share price will reflect that in the upward direction. If you play a wait and see attitude toward Alcoa, you could miss the boat and end up buying at a higher price. Alcoa can be the type of stock that you have to make the bet, before you see the macroeconomic results. It may be a while before we see the high's of 2011 with Alcoa, but with so many stocks flirting at their 52 week highs or all time highs I feel a little more comfortable making a trade in Alcoa at these levels then buying at 2011 highs. Ten dollars looks like a level if Alcoa holds this there is still room for Alcoa to rise to 11-12 dollar level. I do enjoy your article since there are risks to Alcoa and that Alcoa is linked to the macroeconomy, I would just be bearish on Alcoa if the stock was higher.
    Jan 26 03:06 PM | Likes Like |Link to Comment
  • Win Investing-Related Stuff (No Purchase Necessary!) [View instapost]
    88.98 46million shares
    Jan 25 02:35 PM | 1 Like Like |Link to Comment
  • An Option Strategy For A Pullback In SPDR Select Technology Fund [View article]
    Update:

    Another thing I wanted to point out in this article is while I'm not bearish on tech, I wanted to point out that put options are getting cheaper with the vix at low's we haven't seen since 2005. Just like when one buys stock, you want to buy low and sell high. With puts getting lower this could be time to take advantage of cheap insurance.
    Jan 25 02:54 AM | Likes Like |Link to Comment
  • Bullish Option Play On Pfizer [View article]
    Selling a covered call is not a bad idea either and I wouldn't mind getting called away if PFE went higher. I'm just offering a stock replacement strategy. The 19's have a good delta and I'm getting 10% protection at the 19 strike. The last couple of days the price action has been going lower, but fighting back. PFE seems like it wants to go higher when it bounces higher of the lows for the day. On a technical level PFE is sitting in this 21.50 to 22 level and I believe there will be a resolution. If PFE gets to 22 and can find support, this will hopefully solve the resolution to the next leg upside. There's also many large market cap, 4% or higher paying dividend and positive fundamental companies at their 52 week/ all time highs still heading higher and PFE could be the next stock looking to break 3 year highs. My thesis on the trade on PFE, is that I would rather speculate on PFE heading higher using calls however, I will be looking to add to my position on a pullback in the stock. I also like pfizer as a defensive stock to rotate into when other sectors are seeing rotation out of (example: tech) Thanks for the comment.
    Jan 19 11:17 PM | Likes Like |Link to Comment
  • Bullish Option Play On Pfizer [View article]
    I don't own shares. I'm just buying the calls and will sell to close when profit occurs. The dividend is great, but since I don't own shares I won't be getting the dividend. A call buying strategy is when your bullish on a stock, but maybe making a play using options is cheaper than outright purchase of the stock.
    Jan 19 07:39 PM | Likes Like |Link to Comment
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