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  • Buy Apple Before the iCloud on the Horizon Arrives [View article]
    "Investors that bought Apple at the beginning of this year have basically wasted their money for seven months when they could have bought almost any other average performing stock and made much more money."

    They could have sold covered calls if they wanted a monthly income, and at least they haven't lost any of their capital, which is generally considered a good thing.
    Jun 9, 2011. 07:09 PM | Likes Like |Link to Comment
  • Alpha Natural Resources: Buy This Met Coal Leader After a 30% Sell-Off [View article]
    I'm in agreement. I sold some $46 puts the other day when the stock was at $54 for a fat premium, so I would like it to stay pretty close to where it is or just drop a tad so I can get assigned. My understanding is that the stock was added to the S&P 500 on June 1st, so that should help hold the price up. I may get some OTM calls too, in case I don't get assigned on the puts. However note that ANR hit its 52 week low of $35 last July, so maybe there is a bit of seasonality. Let's see what happens next. Money shall be made.
    Jun 9, 2011. 06:53 PM | 1 Like Like |Link to Comment
  • Why a Greek Default Could Be Worse Than the Lehman Collapse [View article]
    "As for the health canard, men paid for their own health care for centuries without dropping dead..."

    I take it your major may not have been the history of public health. Actually every single person born in past centuries (except the 20th) has already dropped dead, most of them at a much younger age than the current average life expectancy. The eradication of contagious diseases, whether waterborne, airborne, or transmitted by sex or blood has been achieved almost entirely by public health initiative led by governments, to provide vaccinations, potable water, sewerage disposal, and so on.

    Of course nations CAN live on less. After the western part of the Roman empire fell apart and there were no longer security forces to protect trade, paved highways or aquaducts carrying clean water cross country, human beings still continued to live, reproduce, and die, but it wasn't at the same level of civilization as before.

    Of course the Greeks COULD pay it all back, but finding a way of achieving this without destroying the country is another. Making the Germans pay reparations for World War I didn't work out all that well. They had to be given another whipping, and then helped back on their feet. And look at them now.
    Jun 9, 2011. 02:37 PM | Likes Like |Link to Comment
  • Housing Double-Dip Fears Further Non-Agency Paper Weakness [View article]
    Maybe. My understanding is that most of the mortgage defaults are at the lower end of the market, which is where the Fannie and Freddie guarantees are to be found. It is also the lower tranche of properties that have lost a greater percentage of their sale value, especially in place like Florida where huge numbers of tract homes of dubious quality were mass produced.

    Higher income home owners with mortgages that are not guaranteed, such as jumbo mortgages, might be less likely to use bankruptcy as a backstop, because they have more to lose.
    Jun 9, 2011. 01:50 PM | 1 Like Like |Link to Comment
  • Apple Options Still Cheap, But Earnings Are Looming [View article]
    "It's kind of frustrating to sit on a long 300/short 360 spread for months on end if the stock's soaring past $400 ."

    Well, obviously one would close that position once the relative deltas closed the gap and take a new position.

    Yes, the $250 call would have a higher delta and would cost more, and the short call you sold would give you are lower percentage yield on capital. Also, if thing went badly and the stock went to $250 or below by January 2013, you would lose more money.

    Of course you could sell calls on volatility spikes. A volatility spike usually means a movement to the downside. A sharp movement to the downside is an always opportunity to roll over calls to a lower strike price to benefit from higher price and moving delta.

    As ever, you have to risk more to make more. What the Greeks give with one hand, they take away with the other.

    My hypothetical suggestion was prefaced with the comment: "If you are confident in the long term prospects of Apple." The general opinion of those whose expertise is much greater than mine is that Apple may be undervalued. I am pretty much agnostic on the matter, but it seems to me that dealing in LEAPS is very likely to give you less downside than holding the actual stock whose delta is always 1. The theta embedded in the LEAP may actually provide some protection against the predations of vega.
    Jun 9, 2011. 01:30 PM | 1 Like Like |Link to Comment
  • Apple Options Still Cheap, But Earnings Are Looming [View article]
    If you are confident in the long term prospects of Apple, buying the ITM 2013 LEAPS and selling OOTM covered calls (actually spreads) is attractive.

    Buy a $300 strike January '13 call with a delta of about .7 for about $7000 and sell an October '11 $360 call with a delta of about .25 for about $1000. Net cost $6000.

    If stock hits the price of the short call, sell your LEAP, buy back the short call, and you should be laughing all the way to the bank.

    If the stock climbs somewhat, but the short call expires worthless, continue to laugh all the way to the bank.

    If the stock continues to tank buy back short call when it loses 1/2 its value, and sell another at a lower strike for more premium.

    If your LEAP expires worthless in 2013, well, it wasn't to be, but at least you got back some of your purchase price along the way. However any time the stock price hits $360 over the next year and a half, you will be able to cash out for a profit of at least 15% on your initial investment, probably much more.

    "Annual income twenty pounds, annual expenditure nineteen pound nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and six pence, result misery." [Mr. Micawber from David Copperfield by Charles Dickens.]

    Read more:
    on Quotations Book
    Jun 9, 2011. 12:30 PM | 2 Likes Like |Link to Comment
  • Smart Money Loves These Dividend Yielding Tech Stocks [View article]
    Yes, but the number of hedge funds that hold a stock tell you nothing. These are large cap stocks and big money tends to follow large cap because it is large and the money is big. Big into small won't go.

    We don't really know from the information provided whether these hedge funds are net long or short MSFT. Just owning shares means nothing as the funds may also be short the calls or long the puts. They may be lightening their positions at certain price points and buying at others.

    If anyone is naive enough to think that because more hedge funds are in MSFT than any other stock, that MSFT must be a great long to buy at today's price needs to think again. In fact they need to make an emergency appointment with a board-certified psychiatrist.

    Disclosure: I have a small long position in MSFT, but I'm short the calls and also short the puts and will acquire some more stock if and when it is on clearance sale.
    Jun 9, 2011. 12:08 PM | 4 Likes Like |Link to Comment
  • Apple's Valuation: The One Article Every Investor Should Read [View article]
    "He and the board have a fiduciary responsibility to do what is in the best interest of the company and shareholders."

    Yes, but that can be interpreted in many different ways. Jobs may be thinking in terms of his legacy and wanting to leave the company in as strong a position as possible to weather the future long term, rather than worrying about the short term price of the common stock. In any case it seems likely to me that he is still very influential.

    Personally I would like nothing better than to see a 10:1 split and the stock at $50 by September, but then I am just for myself and do not care deeply about the long term future of Apple Corp.
    Jun 7, 2011. 05:05 PM | Likes Like |Link to Comment
  • Diana Shipping Stands Out in the Shipping Sector [View article]
    Interesting thing about Diana is that they stopped paying a dividend as of September 2008, presumably with the intention of hoarding cash for future hard times. Seems like the management has a plan. Now the question is, how low can it go?
    Jun 7, 2011. 04:04 PM | 1 Like Like |Link to Comment
  • Apple's Valuation: The One Article Every Investor Should Read [View article]
    Maybe the reason why they are not splitting is because Steve Jobs is not planning for the future, for obvious reasons. I know that he was able to walk onto the stage yesterday and look sort of sprightly for a couple of minutes, but we don't know how much that took out of him. When people are terminally ill, they may not necessarily think rationally in terms of what the survivors believe is rational, because their priorities and perspective may be quite different. We really do not know and cannot know what is going on in Steve Jobs' mind at this time. I wish him the best.
    Jun 7, 2011. 12:50 PM | Likes Like |Link to Comment
  • 5 Cheap Technology Titans Offering Substantial Dividends [View article]
    Don't you think that if Nokia reduces the dividend, this will lead to a further exit and new lows? If Nokia suspends the dividend altogether, then even more so, because many dividend mutual funds and ETFs will be forced to liquidate their holdings, as was the case when BP suspended its dividend. Since Nokia only pays the dividend annually, I guess we will have quite a wait before we know what their intentions might be. Presumably they are hoping for a recovery in sales before they have to make a decision.
    Jun 7, 2011. 11:55 AM | Likes Like |Link to Comment
  • Market Cheaters Sometimes Prosper - Get Used to It [View article]
    True, but the fact that so many people perceive the stock market as a rigged game means that they don't put their money in the stock market, which makes us all losers. Obviously most of the people who do use SeekingAlpha are, by definition, interested devoting at least a portion of their time to finding a way to win the "game".

    However the "average" working person who is not particularly interested in playing the market wants to be able to set aside some money each pay check and see it grow over time in something relatively safe that he/she has faith in. These investors are not well served by the investment community.

    Of course for every winner there must be a loser. If I buy a stock at its low for the year and sell it at its high for the year, the people I buy from and sell to are probably losers. It is not win-win unless the market, on average, perpetually rises. Compare any mutual fund now to where it was in 1999 and it isn't a pretty picture.
    Jun 7, 2011. 10:10 AM | Likes Like |Link to Comment
  • Apple Fails to Lift Nasdaq ETF, Drops Below 50-Day Average [View article]
    Apple was up earlier in the day, then fell sharply, possibly in response to what the media are not talking about, which is that Jobs' health is increasingly questionable. I'm not going into details here for reasons of good taste, but anyone with a medical background will have drawn their own conclusions based on his appearance.

    This issue about "medical leave" is absurd. Jobs is not an hourly employee who has to submit a time sheet.

    While some people may find it a great convenience to have music they have bought from the iStore available via the airwaves on any device--any Apple device, that is--most people are already not short of access to music, which is already very portable, and it may be that recession hit America is underwhelmed with the announcement. The iCloud may also be harder to monetarize wordwide.
    Jun 7, 2011. 02:57 AM | Likes Like |Link to Comment
  • Why a Greek Default Could Be Worse Than the Lehman Collapse [View article]
    When I first went to Greece as a tourist in 1969 it was ruled by a military junta. It could happen again if JasonC had his way.
    Jun 6, 2011. 09:08 PM | Likes Like |Link to Comment
  • Market Cheaters Sometimes Prosper - Get Used to It [View article]
    One of the reasons people think the market is rigged is because the market crashed in 2000 and again in 2008 so that people who have saved for years in, for example, mutual funds see their money halved and then halved again, while the fund managers continue to get paid their full commission. There is a lack of balance of negotiating power between workers saving for retirement and professional money managers.

    Several years ago the Florida Retirement Fund, which is huge, invested a full 2% of its assets in Enron only weeks before Enron crashed. Someone made vast commissions out of this trade, but thousands of people in Florida still remember to this day that the pension fund lost many millions, and regardless of whether there was any chicanery involved, people believe that there must have been.

    It is very possible to make money on the stock markets if you are smart and really study how the game is played, but the average person has a limited chance of success if they just buy stock in what they believe to be good companies and wait for the stock to increase in value. Sophisticated investors know that when Goldman Sachs puts a buy rating on a stock that is just as likely to mean it is a sell as a buy, but unsophisticated investors take these things literally. Unsophisticated investors do not know how to buy stocks by selling put options, rolling over options, and so on, techniques that save vast amounts of capital when the market is moving downwards, so their chances of coming out ahead will always be reduced.
    Jun 6, 2011. 09:05 PM | 1 Like Like |Link to Comment