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After being burned by the .com crash, I have learned to trade options very successfully, mainly on dividend paying stocks. I encourage any serious investor to educate themselves on options trading as a means to reduce risk and enhance returns.
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  • A Great Opportunity On RVBD

    A long-time favorite of ours, Riverbed, was pilloried this week on an in-line earnings report, losing 18% to $16.56 after giving weak guidance. The same thing happened three quarters ago, with the stock falling to 14 before recovering to 24. We think $14 is a solid entry point, and like selling the June $15 puts at $1.12 to get us there, or to put $112 per put in our pocket.

    Disclosure: I am long RVBD.

    Additional disclosure: Various short put positions in RVBD

    Tags: RVBD, Networking
    Feb 10 10:22 AM | Link | Comment!
  • Juniper - An Option Trade To Make 500% In Six Months

    Juniper Networks, Inc. designs, develops, and sells products and services that provide network infrastructure for networking requirements of service providers, enterprises, governments, and research and public sector organizations worldwide.

    It is the second largest enterprise networking company, behind only Cisco, and with highly competitive products.

    Juniper (NYSE:JNPR) was beat up last week on a poor report by Ciena, however they have a strong business, balance sheet, and cash flow. You can sell the April '14 $15 put and buy the $15/$19 call spread for net .7 on the $4 spread that's $2.50 in the money on day one.

    Disclosure: I am long JNPR.

    Sep 05 6:58 PM | Link | Comment!
  • A Bullish AAPL Options Trade For Earnings

    Apple is scheduled to report its earnings after the market close on July 24th, and this presents an excellent opportunity for an earnings play trading options.

    A brief review of the of Apple earnings history over the last eight years (an excellent summary is available at, reveals that the company typically offers very conservative guidance which it consistently beats, and that the stock rises after earnings more than 70% of the time. The support of these two facts, combined with the anecdotal evidence of the decline of Nokia and RIMM, offer great support for a bullish earnings trade on Apple. It will also be noted that Apple is one of the best values among technology stocks, with a recently announced $10 billion share buyback program, a dividend payment of 1.76%, and a forward P/E ratio of about 12. An excellent summary of recent earnings beats is shown below in this chart from

    (click to enlarge)

    The difficulty in trading Apple is found in the fact that with the stock at $604.30 per share, how does the investor get enough leverage to make a reasonable trade? The solution is found in options, and more specifically in terms of a trade structure, the bull call spread. A bull call spread is the options strategy of buying a lower cost call, and selling a higher strike call of equal number, with the same expiration date. A spread of this nature is profitable whenever the difference between the closing price and the lower strike is greater the cost of the trade. By selling the higher strike, the trader caps the potential gain, but also reduces the entry cost. This earnings week, playing it conservatively, I like buying the August 575 call at about $40, ($4k) selling the August 605 call at $21 ($2100), for net $19 ($1900). This trade starts out almost 100% in the money, and results in a 100% gain if AAPL holds 605 for 30 days! That's an excellent return that this options investor can live with.

    Note: The author is long Apple options.

    Disclosure: I am long AAPL.

    Tags: options
    Jul 23 10:30 AM | Link | Comment!
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