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  • Cummins: Play On Cheap Natural Gas [View article]
    Navistar hasn't popped up on my radar, but I'll look into it.

    Synthetic diesel looks pretty cool as well, lot's of stuff on the horizon.

    Thanks
    Aug 30, 2012. 10:34 AM | 1 Like Like |Link to Comment
  • Caterpillar: A Bump In The Road In China [View article]
    pbanik,

    Just posted an article on CMI: http://seekingalpha.co...
    Aug 30, 2012. 08:09 AM | Likes Like |Link to Comment
  • Cummins: Play On Cheap Natural Gas [View article]
    That's pretty cool! Thanks!
    Aug 30, 2012. 06:45 AM | Likes Like |Link to Comment
  • Caterpillar: A Bump In The Road In China [View article]
    Yes, on a debt/equity ratio basis, CMI looks more attractive than CAT, and with respect to a long-term investment.
    Aug 29, 2012. 06:40 AM | Likes Like |Link to Comment
  • Caterpillar: A Bump In The Road In China [View article]
    Good point, however, a slowdown in China can slow (or signal slow growth for) the economies of other countries and regions as well. If we weren't in a global economy, then 2.5% of sales is a "pimple", as you say. But in a global economy, the pimple can cause the whole bunny to get sick.
    Aug 28, 2012. 02:39 PM | Likes Like |Link to Comment
  • Caterpillar: A Bump In The Road In China [View article]
    If CAT drops to the low 80's, I'll roll it, and if it looks really bad, I might roll it to a bear-call spread -- and for a net credit (more potential profit).
    Aug 28, 2012. 10:12 AM | Likes Like |Link to Comment
  • Yum Brands - China Growth Comes With Double-Digit Wage Inflation [View article]
    Yes, the old tried-and-true buy-and-hold strategy. You take the high road and I'll take the low road, and we'll see who makes more profit.
    Aug 28, 2012. 09:16 AM | Likes Like |Link to Comment
  • Baidu: Qihoo 360 A Big Threat? [View article]
    The red curve uses Black Scholes.
    Aug 28, 2012. 09:13 AM | Likes Like |Link to Comment
  • Caterpillar: A Bump In The Road In China [View article]
    Well, technically, we're not "investing in" Caterpillar with a bull-put credit spread, but there is a pretty nice bull-put credit spread for CMI, the Sep 85/90 with a potential return of 9.4% (137.4% annualized) and a separation between the underlying and the short strike price of 8.7%. I'd set a management point around $93.50. But, I haven't researched CMI, so do your own due-diligence prior to entering the trade.
    Aug 28, 2012. 09:12 AM | Likes Like |Link to Comment
  • Caterpillar: A Bump In The Road In China [View article]
    Actually, the bull-put spread and the bear put spread could both work out.

    Unless you closed the Sep 82.50/85 bull put spread, you are still in good shape, just roll it out-in-time before it starts to get into trouble.
    Aug 28, 2012. 09:07 AM | Likes Like |Link to Comment
  • McDonald's: Making Lemonade Out Of Lemons [View article]
    Seems we have some issues with seeing how this position can be profitable if the price of the stock is greater then $87.50 at expiration in December of 2012.

    So, let's take an arbitrary value for the price of McDonald's stock at expiration in December of 2012, say $100.

    With the stock being assigned the profit/loss is:

    Stock $87.50-$87.58 = -$0.08
    Call option profit = $2.95
    Put option loss = -$1.44
    -------------------
    Total profit = $1.43
    ($2.95-$0.08-$1.44)
    Aug 27, 2012. 02:55 PM | Likes Like |Link to Comment
  • American Tower: Winner, Winner, Chicken Dinner [View article]
    I went ahead and subtracted $0.66 of expected dividend payments from the cost basis, so maybe this is causing the disconnect.

    Here's a p/l without considering the dividend:

    http://bit.ly/Nx6eid
    Aug 27, 2012. 08:52 AM | Likes Like |Link to Comment
  • American Tower: Winner, Winner, Chicken Dinner [View article]
    Doesn't always happen, but for AMT, every time in the last year the stock price has been near the lower Bollinger band, the stock price increased.
    Aug 24, 2012. 01:43 PM | Likes Like |Link to Comment
  • American Tower: Winner, Winner, Chicken Dinner [View article]
    The %maximum loss would have been higher for the 68/69 puts, and I generally like to limit the %maximum loss to less than 8%, as 8% is not too difficult to recover via some type of income method.

    Also, another benefit of selecting further out-of-the-money is that the "insurance" cost per day is less.

    The drawback to further in-the-money, is the stock has to go up more before starting to realize a profit.
    Aug 24, 2012. 11:32 AM | Likes Like |Link to Comment
  • American Tower: Winner, Winner, Chicken Dinner [View article]
    If you are referring to the Black Scholes equation being derived based on the assumption the stock market is Gaussion/Normal, then yes, the Black Scholes is not very accurate for options that are far out-of-the-money, as the stock market does not have a Gaussian probability distribution, but rather has much wider "tails" than the Gaussion distribution.

    Basically, the wide tails for the stock market's probability distribution results in Black Scholes option pricing which is "off".
    Aug 24, 2012. 11:27 AM | Likes Like |Link to Comment
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