Tactical Investor

Long/short equity, deep value, special situations, contrarian
Tactical Investor
Long/short equity, deep value, special situations, contrarian
Contributor since: 2008
Company: Tactical Investor
We tried to keep it simple, could have used the word bank profits on call options that are showing gains of 130%, that would fall along the lines of simply trying to draw page views. As it stands the word option was missing but the title was rather simple and not designed to be bait clicking trap.
One should make some attempt to read the article. Making a comment without reading the article is like a shoemaker trying to tell a Chef how to cook.
you need to understand the difference between being long the stock and long options. One has a time premium factor to consider. In this case the calls are set to expire in Jan. It would be foolish to hold onto them given that you have roughly one month of time premium left.
No mention was made of selling the stock. You and several others are not taking the time to read the article and understand what is being discussed. If you want to hold your calls till expiration, that is fine, but that is not a prudent investment strategy.
It seems that you and svaftsploos have not read the article. So you are saying you would hold onto these calls even though they will expire in about a month. That makes no sense. Our position was to sell the calls and not the stock. The stock is a whole different story and we are still bullish on the stock.
we also advocated using a pullback to purchase new calls with more time on them.
The point is to sell the calls which are set to expire in Jan. Why does everyone assume we are talking about the stock. It would be silly to hold the calls with time running out when you are sitting on such huge gains.
yes sorry for the typo, the calls are set to expire in Jan 2013
The recco was not to sell the stock but the options which are set to expire in Jan 2014. The stock still has more run to run.

The advice is not to sell the stock but the options. In case you did not look the calls are set to expire in Jan 2014 and its not worth taking the risk when you are up over 130%. One could sell the calls now and use a pullback to purchase calls that have more time on them.
The recommendation was to sell the calls. If you own the stock that is a separate issue.
Have not looked at the stock closely for awhile, but based if one takes a look at the technical pattern, it has not fared so well, The stock is still in a downtrend, though it is trying to put in a bottom. If 1.20 holds then it will be move in the right direction and a sign that the stock is ready to turn around. A weekly close above 1.80 would definitely confirm that a multi month bottom is in place.
Payout ratios are not that important when it comes to MLPS/REITS as they are generally pay a majority of their cash flow as distributions; in the case of REITS they are required to pay out roughly 90% of their cash flow as dividends. Payout ratios are calculated by dividing the dividend/distribution rate by the net income per share, and this is why the payout ratio for MLPs and REITS is often higher than 100%. The more important ratio to focus on is the cash flow per unit.
However the rest of what you have to say makes sense. But as is the case with everything, one can be right but end up broke before the market follows the path it is supposed to. Having said that CIM could still rally with the general markets (if there is a santa claus rally) before topping out. It has held up pretty well so far
Keep in mind that this is play for individuals willing to take on some risk. Having said that it appears that the market has priced in the negative news for this information has been out there for awhile. Markets are forward looking beasts. Once again, though this play is only for those willing to take on some risk and in our opinion its not a long term play. The focus should be on the short to intermediate time frames.
That was just one of the many pieces of data provided. If it was the focus of the article then we can see the problem. However, your point is noted
It is for the entire 2012.
Here is another source
KMP expects to declare cash distributions of $4.98 per unit for 2012, an 8 percent increase over the $4.61 it distributed for 2011. KMP expects to generate cash flow in excess of distributions of approximately $70 million, consistent with its budget.
You could do that but one could also think of doing the following
write a bull put spread and use any premium left over to purchase calls just in case the stock moves higher.
At the same time you could sell naked puts and extreme prices as you suggest such that if the stock gets assigned to your account, you are more than happy to take possession of them.
Well it depends on how you look at it. You are only using part of the premium to buy the calls. Let us say you put in a limit order to buy the stock today you would pay 84.94. With this strategy you would get in at 78.50 if the shares were put to your account. On the other hand if they were not put to your account and the stock took off, you would benefit from the two calls you are holding. So if you are bullish and looking to get into this stock at a lower price. You could in a way call this a win win strategy. It all comes down to ones outlook and ones investing strategy.
Thanks for commenting
We advocated placing a stop at 12.00 which has been triggered.
As is the case nowadays the initial reaction will probably be negative. However even without the new pipeline in place the company is still a good long term play. So if the pipeline is denied and the stock pulls back strongly look at it as another good long term buying opportunity.
Laure dover
no worries :)
NOK has a better chance that its has several income streams to rely on besides the smart phone sector. However RIM is the leader in terms of security and in the overseas markets it is still doing rather well. Thus there is always a chance that BB10 could breathe some life in the company.
It was an error on our part, while doing research several pages were open and mistakenly the wrong information was posted. The correct information is as follows. The board of directors has authorized a share buy back program of to 5% of the outstanding shares. The mistake is being addressed as we speak. Thanks for bringing this to our attention.
Stock Jackal
Thanks for taking the time to comment and for the Kudos. Given that its all or nothing for RIM, we think that this is a safe way to play the long side. You have the option of locking in gains if the stock takes off, on the other hand if things do not work out, your downside risk is limited and clearly defined from the onset.
Thanks for commenting. Will make a note to mention that the calls could lose value if the stock declines. However we think that most individuals understand that the calls could lose value if the stock dips. The main purpose of the article was to provide a strategy to play the long side without taking on too much risk.
Actually you do not need to have the amount of money you state in the account. You only need to have the difference between the two strike prices as your position is hedged. In this case you would only need $300 per spread.
In terms of the shares being put to your account, this would only occur if the put you sold was significantly in the money and assignment typically occurs on the last trading day of the option. We offered two strategies to deal with this
1) close the spread out if the put you sold is at or in the money. You can then write a new spread.
2) Roll the put you sold. Buy back that put and sell a new out of the money put.
Either strategy would prevent the shares from being assigned to your account.
You only need to have the money to back a put when you are selling a naked put and not when you are writing a bull put spread. That is why this strategy is generally considered a low risk strategy as your risk is defined right at the beginning. In this case your total risk is $300.
Should have added the word margin there. If you have a margin account, you could end up being assigned more shares than you wanted to buy. Off course one way to offset this problem is to roll the short put the moment its at the money .
You could somewhat hedge your position by selling covered calls. This will reduce your net cost. If the stock starts to move up, you can either let the shares be called away and start the whole process again or roll the calls forward.
They also have a very dominant presence in Indonesia.
Simply selling puts might not be the best way to go, but writing a bull put spread and using the credit to purchase calls is a pretty good idea.
Limited downside risk - unlimited upside potential

The full strategy was to write a bull spread and use the credit to purchase calls. This way you have limited downside with unlimited upside potential. Technically this is a better bet than simply owning the stock as you have no downside protection in the event things do not go as planned- Just saying :)
A close below 12.00 would indicate lower prices: short term this would not be a bullish development. As the markets are expected to rally to year end PBI should start to trend higher when the markets bottom out.
So one way to play this now would be to write a bull put spread and then use the credit from the spread if you are up to taking on a bit more risk to purchase calls. Your downside would be limited but it would not affect your ability to lock in gains if the stock took off.
Not sure where but saw an article somewhere stating AT&T only has a 6 month exclusive contract to sell the Lumiat. If this true and the phone sells well, then Nokia could form deals with other carriers.
On a desperate note, the deal with China Mobile to sell a modified version of the Lumia (920T) is a pretty big coup.
A $100 savings per customer is a pretty big deal today and if the phone performs well, there is no doubt that carriers will start to line up to offer this model.
They have several streams of income in addition to the phone segment, so thoughts of bankruptcy are just that, pure thoughts and wishful at.
Talking about Wall Street, those figures are accurate as of Oct 15. 293 million shares short.