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MIKE PHILLIPS Mike Phillips is a seven-year employee of Power Financial Group, Inc. He is involved in the support and development of PowerOptions, an award winning Internet site for searching for stock option strategies and PowerOptionsApplied, an Internet site providing an option-trading... More
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PowerOptions WeBlog
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Iron Condor: Neutral Strategy for Uncommon Profit
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  • Rackspace Hosting’s Call Option Volume Up

    The call option volume for Rackspace Hosting (NYSE:RAX) is up moderately today.  Rackspace’s stock price is also up about 3%.

     

    Rackspace provides managed hosting, cloud computing, email, file sharing and backup products and services.   Rackspace attributes is radical growth to its Fanatical Support® and its focus on dedicated hosting and cloud computing.  In 2008 Rackspace acquired cloud computing companies Jungle Disk and Slicehost.  Rackspace has expanded operations to include the U.K. and Hong Kong, and plans to expand into Europe and further into Asia in the future.  Rackspace’s competitors include AT&T, Pipex, Terremark, The Planet and Verio.

     

    Rackspace’s stock price is near it’s 52-week high and up over 300% from its 52-week low in February.  Rackspace has a fairly pricey P/E at 89.

    Rackspace Hosting Stock Chart

     

    Rackspace has experienced moderately high volume for its December 20, January 20 and March 22.50 call options today.  The 22.50 call option is out-of-the-money and the 20 call options are slightly in-the-money.

     

    Rackspace has a nice covered call available for January expiration with a potential return of 5.3% and a timeframe for realizing the return of 43 days.

    To enter the covered call investing position an investor would purchase the stocks in multiples of 100 shares for their trading portfolio and sell one call option for each 100 shares of stock purchased for their personal stock portfolio.



    Disclosure: No position in RAX
    Dec 04 1:22 PM | Link | Comment!
  • Huntsman’s Call Options Going Berserk

    Huntsman’s (NYSE:HUN) call option volume has spiked today and its’ stock price is also up about 6% as well.

     

    Huntsman is in the chemical business providing a whole host of chemically oriented products.  Huntsman also licenses its products.

     

    Huntsman has some much larger and established competitors in Dow Chemical (NYSE:DOW) and DuPoint (NYSE:DD), but has faired well nonetheless.

     

    Huntsman has a significant amount of cash, over $1 billion, and is in the process of acquiring assets from Tronox’s bankruptcy.  Huntsman P/E is very low at 4.

     

    Huntsman’s stock price is up about 400% from is low in Feb./Mar., but is well off of its two-year high around $23.


     

    Significant volume in Huntsman’s call options is being experienced in the December, January and February out-of-the-money options.  This call option volume looks very bullish.  Something appears to be up with Huntsman, maybe they’re finalizing the acquisition of Tronox’s assets.  In their recent conference call, they mentioned their Asia business has been performing very well and is primed to continue to perform very well.  Maybe Huntsman has something cooking up in Asia.

     

    An attractive covered call for Huntsman is available for December with %if unchanged potential return of 3.4% and a %if assigned potential return of 9.5%.  The call option of interest is the December 11 with ticker symbol HUNLK.

     

    To enter the covered call investing position an investor would purchase the stocks in multiples of 100 shares for their trading portfolio and sell one call option for each 100 shares of stock purchased for their personal stock portfolio.



    Disclosure: No position in HUN, DOW or DD
    Dec 03 1:38 PM | Link | Comment!
  • Heavy Call Option Volume for PMC-Sierra
    Call option volume for PMC-Sierra (NASDAQ:PMCS) was significantly up today.  In PMC's recent earnings call they noted they were working on selling their products to IBM (NYSE:IBM), maybe they're making progress.

    PMC-Sierra develops semiconductors primarily in the networking arena, but also develops and markets devices for microprocessor, voice over IP, Fiber to the Home, Wireless, servers and storage devices.

    PMC's top competitors are Applied Micro Circuits (NASDAQ:AMCC), Broadcom (NASDAQ:BRCM) and Freescale Semiconductor (private).

    PMC's stock price is up over 100% from its low in December, but of late has been in a downslide, dropping through two previous support levels and approaching a third previous support level.  The stock price is also flirting with its 200 day moving average.

    PMC-Sierra Stock Price (<a href='http://seekingalpha.com/symbol/pmcs' title='PMC - Sierra, Inc.'>PMCS</a>)

    It appears with today's high out-of-the-money call option volume that someone is bullish on PMC-Sierra.  The call options with significant volume are a few months out Feb. and May with a strike price of $10.





    Disclosure: No position in PMCS, IBM, AMCC or BRCM
    Dec 01 4:07 PM | Link | Comment!
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