Stout Opportunities, a Seeking Alpha Marketplace Service, is launching in May 2017.
Stout Opportunities strives to provide timely and brief trading ideas that may make use of common stocks, preferred stocks, bonds, and or options.
Each investor has their unique risk-reward tolerance. Some investors like to swing for the fence while others prefer a single or a walk. My style is to strive for consistent small gains rather than inconsistent large gains. That puts me in the single and walk category. However, there will be times when a special situation is found that may return large gains. A goal to average 1.0% per month has been set.
The sale of cash secured put options have been used to earn the option premium or to purchase the shares at a discount to the current share price. A spreadsheet has been created that tracks the trade risk-reward characteristics and performance. A number of simple metrics are calculated such as the return on the strike price and its annualized rate, the days to expiration, dollars earned per day, the return to call or discount to purchase and its annualized rate, and the percent of the premium earned when a position is closed.
Options are viewed as a form of risk arbitrage. Earning the option premium is preferred to being assigned the stock when selling puts, although puts are sold on issues that look attractive. The sale of the shares is preferred when selling covered call options; however, the shares held generally pay a dividend or offer compelling covered call returns.
Formal education background includes the study of economics and finance along with getting an MBA and completing the first two levels of the CFA program. My writing style is brief. Fundamental and technical analysis is used along with attempting to gauge market sentiment. I am a believer in using dividend and interest income to fund more risky investments rather than chase risky investments with hard-earned capital. Therefore, I am not a fan of companies using owner’s money to repurchase shares, as I would prefer to increase the ownership and income, rather than just the ownerships. Besides, after more than 30 years of reviewing share repurchases very few firms have been found to have increased shareholder value. What creates value is increased net income. Some firms have gone private or trade with a lower market capitalization than the cost of shares repurchased.
Thank you for your interest in Stout Opportunities.
You may wonder why a list of past calls is not displayed as a number of articles have been written. Past performance is not indicative of future performance. What I have done in the past, mostly likely does not mean much to you. The future performance and style is what counts. That is why you may experience a risk-free trial to Stout Opportunities.
Feel free to review the historical articles. You will find that I am not a fan of share repurchase plans when reviewing articles on Cliffs Natural Resources (CLF), General Motors, and others.
Thank you again for your interest in Stout Opportunities. Hopefully, we both can benefit from the ideas presented.
Disclosure: I am/we are long CLF, GM.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Also have short put and call options that may be closed or added at any time based upon market conditions.