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  • Apple's Dirty Little Secret [View article]
    When the market capitalization of AAPL is 50% less than its cash holdings, then I will go cautiously long with hedges!
    Apr 19 07:11 AM | 1 Like Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    Good point sweeps63, but if you contributed to an IRA account, the money could be taken from your bank account via automatic ACT transfer, and you could just make a purchase once a year with a brokerage fee of less than $10., rather than using DRIPS.

    I also agree with the above from Tord.Grip (say hi to Sven for me) about investing in SDY in case one or more of the companies goes bust.
    Apr 17 05:36 AM | Likes Like |Link to Comment
  • How To Invest $3 Per Day For Retirement [View article]
    The underlying idea is very sound, however the headline is misleading. There is no point contributing daily, when most people are paid every two weeks, so it would be better to add $42 every two weeks rather than $3 daily, which is probably what he meant anyway.

    The author discusses the retirement saver running the plan until he/she is 100 years old. Although the companies listed are all very well established and excellent businesses, the saver should keep an eye on their performance, as one cannot necessarily assume they will be doing well 80 years from now. Over the last 80 years many Dow Jones Industrial Companies have fallen from grace. Where would you be with your investment in Woolworth's for example, General Motors, and Eastman Kodak?

    Also, the author does not mention this, but it would be better to deposit the funds in a tax advantaged retirement account such as a ROTH IRA or a regular IRA. The ROTH IRA is probably the most advantageous, but if the wage earner needs a tax refund right now to use for other purposes, he/she may prefer the regular IRA.
    Apr 17 05:13 AM | 2 Likes Like |Link to Comment
  • 5 Trade Ideas That Can Make 500% In An Up Market [View article]
    With a lot of Phil's plays, it is difficult to get a fill at the same price, but in the case of the ABX $23 strike January 2015 put, the bid is now at $7.15 for a net entry of $15.85.

    If it was a great deal then, it is an even better deal now.
    Apr 16 06:01 PM | Likes Like |Link to Comment
  • The Art Of Trading Volatility [View article]
    "You must sell options to reap the 'theta' impact, and the results of numerous studies show more than 70% of all options expire worthless."

    It rather depends on whether the options are in, at, or out of the money. I bet you a $200 AAPL call won't expire out of the money.

    Perhaps it should be that 70% of at the money options (calls and puts) expire worthless due to stock volatility failing to exceed the theta cost of the premium. One would expect the percentage of OTM options that expire worthless to be higher and the percentage of ITM options that expire worthless to be less.
    Apr 16 05:44 PM | Likes Like |Link to Comment
  • Apple: $420 A Share Could Have Marked The Bottom [View article]
    Tend to agree. It is pretty meaningless to talk about $420 being a bottom until we get earnings announcement this month. If all goes well and Apple stays above $420 after earnings, then maybe $420 (actually $419) is a bottom.

    If I could ask a question at the earnings call it would be: Tim Cook, top or bottom?
    Apr 16 01:47 PM | Likes Like |Link to Comment
  • 5 Trade Ideas That Can Make 500% In An Up Market [View article]
    I am one of Phils biggest fans and owe him almost everything I know about trading options, however that doesn't mean that I follow blindly whatever he suggests because his financial situation is not quite the same as mine and I probably demand an even higher degree of safety in a trade.

    Here is something I wrote about his Apple trade on January 17th:

    "I also wonder whether it might be better to sell the short puts or bull put spread now before earnings while IV is high, then buying the BCS after earnings when IV will be lower.

    If the stock goes up on earnings, but IV comes down, the $400/$500 BCS might not be much more expensive and the short put trade will already be profitable. If the stock drops below $500 again on earnings, then the $400/$500 BCS will be a real bargain."

    Yay, I was right! Does this mean I am a better investor than Phil. By no means--note his reply (this was just before Apple annouced January earnings.)

    "As to waiting for earnings - it would be interesting to see how that works out but we're pretty bullish at this level so we don't want to pay extra when we're happy to DD if these spreads get cheaper. "

    [Sounds like a bit of a case of a Rookie falling in love with a stock. I wonder if Phil has any Apple devices? No, I am being very mean, and it is absolutely true that there is plenty of time for AAPL to get back to $500 by the end of the year.]

    The spreads have gotten much, much cheaper, so maybe now with Apple at $420, it is the time to double down?

    For my part, I would still like to go long Apple at under $400 per share. Will Tim Cook play Santa Claus and make this happen for me? Let's see if I can buy an out of the money $400 LEAP after this month's earnings, and perhaps sell the $500 call after the stock recovers a bit in the fall.
    Apr 16 09:49 AM | 2 Likes Like |Link to Comment
  • Apple And Boeing Stumble: Was Outsourcing Innovation Part Of The Problem? Part I [View article]
    The maps thing is simpler than people think. It simply costs a vast amount of money to put together a worldwide mapping operation and then to keep it updated. Consider that Nokia spent billions to acquire Navteq, which powers most in car navigation systems, but hardly makes any money on it.

    Apple tried to get in on the cheap by buying some mapping from Tom Tom and using cheap, but outdated public domain maps in many places with predictable results.

    For example here in the Dominican Republic the major new North-South Highway that was opened in 2009 does not appear and therefore driving directions offered are absurd. Apple has no ongoing mapping organization like Navteq with people in cars and bicycles with digital cameras mounted on the roof patrolling every street. Apple just decided to pretend it had its own mapping and was caught with its pants round its ankles when no one was fooled.

    Of course in many developed areas like the US and Canada, Apple maps is probably perfectly adequate for most people, but perception is everything.

    Cook might have said "Yes we are just starting out in mapping, which is a new business for us, but we have some great plans for the best mapping system on the planet using revolutionary technology that we have developed," but it would probably have been a lie. That is why we are not hearing any great news about Apple maps or about Apple acquiring mapping assets.
    Apr 16 08:23 AM | Likes Like |Link to Comment
  • Microsoft's Windows 8 Isn't A Flop ... Yet [View article]
    G-Goo-Google it! Eureka! Why didn't I think of that?

    Why would I even waste my time.
    I think it's a total turn-off when I have to 'Google' how to turn my computer off. "No pun intended! DERPA-DER"

    Now to me it would be much easier to Google how to turn it off than to reinstall another operating system. Probably that is just my ineptitude, though.
    Apr 15 10:46 PM | Likes Like |Link to Comment
  • Microsoft And The Windows 8 Conundrum [View article]
    It is like a lot of people tend to say "invariably" when they really mean "as often as not". If something was really invariable, it would never vary.
    Apr 15 08:05 PM | Likes Like |Link to Comment
  • Microsoft's 'Secret' Projects That Will Completely Rock Your World [View article]
    "...i like to add when it is near 52wk high and sell when it is near 52 week low and collect a dividend in between..."

    That is a unique approach. Could you write an article?
    Apr 15 09:25 AM | 6 Likes Like |Link to Comment
  • Buy Stocks On Sale Using This Strategy [View article]
    You can sell cash secured puts in IRAs in some (maybe many) brokerage accounts. You might want to change your broker.

    A more economical way to do it is to sell a spread. For example if you sell a naked at-the-money put on Apple you would need $43,000 in cash minus the premium received, but if you sold the $430/230 spread you would only need $20,000 minus the premium received, hence your return on your money would be almost doubled. Your risk per dollar committed to the trade would also be doubled, although you might think that AAPL falling to $230 is probably unlikely, and at least the "fig leaf" long put provides a kind of safety net in the event of total disaster.

    However the problem with this approach is that it must be used judiciously to prevent your portfolio from being overleveraged.
    Apr 15 09:15 AM | Likes Like |Link to Comment
  • 'Beating The Market' Makes For An Incomplete Discussion [View article]
    A lot depends on whether the investment advisor was long or short when the market was down.

    One problem is that you cannot collect dividends unless you are long the stock, although you can mitigate this a bit by selling in the money calls and have it both ways.
    Apr 14 11:05 AM | Likes Like |Link to Comment
  • Microsoft And The Windows 8 Conundrum [View article]
    Exactly. For businesses paying for software is a tax deductible business expense among many others. Hardware can also be depreciated. Businesses want the reassurance that they have the best and that there is support with the product. Viruses and crashes which cause down time for employees may be extremely expensive.

    For private individuals it is a different matter. No tax deductions or depreciation in most cases, and viruses are an inconvenience and maybe an expense, but they don't usually stop you from earning a living.
    Apr 14 07:41 AM | Likes Like |Link to Comment
  • Buy Stocks On Sale Using This Strategy [View article]
    "So your net cost to start is $4000 minus $550 for the two long term options you sold, or $3450."

    Actually with a cash secured put, your net cost to start is $8000 minus $550 for the two long term options you sold, so the return on the cash is only half. In a margin account your situation is rather better, but still less favorable than what is quoted above.

    My approach (on 100 shares) would be to look for a down day or spike down and first buy 40 shares, using a limit order about 3% lower than the current offer price. I would then try to buy 30 shares for 3% less, and if that was successful, I would then try to get the other 30 shares for another 3% less. Now if the stock moved down another 3% I would sell my long term put ($35 strike 2015 for about $4 per share) for another 100 shares.

    While I waited I would be able to collect my dividend on the 100 shares purchased. If I did not succeed in buying more than 40 shares, then at a minimum my position would be in credit after I had received dividends for a year and at best I would have a nice profit on the capital invested. (However it is always a mistake to think that a stock will never be so cheap again!)

    If the 100 shares I had acquired moved back up to at least to breakeven point, then I would sell the 2015 at the money call. This would bring in about $4 per share, or 10%, effectively doubling the dividend over the next 2 years. I would then collect my dividends and wait to see if I was called away.

    If the stock moved up sharply in the near term and my shares were called away, I would have any dividends collected, plus the $4 per share, plus the profit on the sale of the 2015 put which would rapidly be decreasing in value as the stock moved up. I would then start the same process again and sell a put to get my shares back.

    If the stock moved down to about $30 by 2015 options expiration, which is what it was while the unstoppable oil was gushing into the ocean at the Macondo drilling site in the summer of 2010 and the dividend was suspended, then I would end up owning 200 shares at a net average price of something like $33.50 each and would have collected about $400 in dividends over that period.

    Thus I would own 200 shares in 20 months for a total net outlay of around $6,000 and look forward to future dividends of over 6% on my 20-month outlay.

    I have just done these calculations in my head, so they are a bit approximate, but I think basically on target.

    The court judgment is certainly hanging over BP, but at this level judgments are ultimately political in nature and should BP get the "death penalty" the biggest losers would be Anglo-American pension funds, so I don't see the US government confiscating future huge amounts from pensioners who were not responsible for what went down in the Gulf or forcing BP to stop its dividend again, especially in view of the fact that BP has already spent billions compensating a vast number of businesses in the southern US, many of whose claims seem pretty specious. It is another case of too big to fail.

    Actually I am quite bullish on BP and expect to see the stock over $50 by 2015. The company is buying back 8 billion dollars of stock and I can't see the stock going much below current levels in the short term. This one could be a huge winner for those who are patient. It was a huge winner for me in 2010.
    Apr 13 04:47 PM | 2 Likes Like |Link to Comment