A quick spotlight on some of today's compelling plays & market observations courtesy of the StockMarketCookBook.com.
Special Dividend: Sara Lee (SLE) announcing that it will split its operations into two public entities. The split includes a special $3.00 cash dividend to be paid sometime before the split which is slated for next year. Stock is currently down 2% on heavier than normal volume.
Java Jolt: Coffee (NYSEARCA:JO) etn (exchange-traded note) breaking recent 6 week consolidation to hit a brand new high. Forget gas at $4/gallon; how about a $4 cuppa joe?
How low can we go? I can't tell you that but I can say that markets have a strong tendency to correct according to a Fibonacci number of days: 1, 2, 3, 5, 8, 13. (Check it out for yourself if you don't believe me.) What's the reason for this? Nobody knows. It's just one of those mysterious phenomena.
When the market hands you some lemons, make some lemonade: Take advantage of increased volatility by placing a covered put on dowdy woman's apparel retailer Talbot's (NYSE:TLB). Stock broke $6 support today and is now trading at $5.93. To place a covered put, you must first short the stock and then sell a put against it. Currently, the Mar 6 put is trading around $0.55 which gives an 8% ROI (return on investment) if the stock is put to you, 9.3% if not. You'll profit from this trade even if the stock rises to $6.48. (Note: Do not attempt this trade if you have no shorting experience or are unfamiliar with options trading.]
Investing trend: Closed end income funds have been rallying as investors search for ways to boost income. Making new highs today: AVK, FCT, EVF, JCE. All of these boast dividend yields in the 5-8% range.
Have a good weekend!
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