The bears continue to have the upper hand in the stock market. Following on last week’s poor showing, which was capped off by Friday’s dreadful action, we had more selling yesterday and so far today have yet to gain any traction. As a result, the market’s near-term prospects are starting to look bleak. Read More
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Yesterday we open a new position in the American Express October 16, 2010 39 put option. If the economy continues to struggle, the company’s default rate is likely to turn higher once again and forecasted profits will fail to materialize. And while the stock has fallen along with the rest of the market, it appears to have room to fall considerably further. Set a limit order to pay no more than $4.90 per option if you don’t own it already. We’ve had lousy results with our other open options positions, all of which are calls. Teva Pharmaceuticals (TEVA) was down considerably ahead of our purchase of the Teva July 17, 2010 60 call option. But rising tensions in the Middle East following Israel’s raid on a blockade-running ship have exacerbated the decline. Shares of CVS Caremark (CVS) sold off yesterday when Walgreen’s announced that it was pulling out of CVS/Caremark Pharmacy Benefits Management contracts as they come up for renewal. The full effect of the move won’t be felt for as much as three years, and the hit to CVS’s earnings will be at worst quite modest—and the company could actually end up picking up Wallgreen customers as a result. Nevertheless, Wall Street sees it as CVS losing a customer. The CVS Caremark August 21, 2010 37 call option is a hold. Freeport Copper & Gold’s (FCX) stock has been slammed on the drop in copper prices, a result of expectations that China’s economy is screeching to a halt. We suspect the Chinese, always shrewd traders, will return to the market in size at any time. The Freeport August 21, 2010 75 call option is a buy for new clients at its current price. Read More
Buy to open the American Express October 16, 2010 39 put option. Set a limit order to pay no more than $4.90 per option. Read More
The European Union continues to set the tone for markets worldwide as the confederation grapples with its debt crisis, without fundamentally addressing the problems that got them into the mess they’re in. Spain’s banks are front and center in the crisis right now, after the government forced to merger of several healthy and weaker players. Read More
We made several changes since our last update. We closed the Research In Motion September 18, 2010 65 put option for a 55 percent gain. We added the Teva Pharmaceuticals July 17, 2010 60 call option as the attractively priced stock was under pressure simply because of portfolio managers rebalancing their holdings in response to MSCI Barra reclassifying Israel where Teva Pharmaceuticals (TEVA) is based as a developed market rather than a developing one. Set a limit order to pay no more than $1.00 per option if you don’t own it. We also added the Visa September 18, 2010 75 call option looking to take advantage of the misperception of that damage the financial reform bill working its way through Congress will have on the company’s business. The option is a buy for new clients at its current price. Among our other positions, though the stock is still well below the strike price on our Freeport Copper & Gold August 21, 2010 75 call option, Freeport (FXC) should continue to recover as all indications are that China’s economy is not about to come to a screeching halt and that copper demand should remain high. The option is a buy for new clients at its current price. Read More
Buy to open the Teva Pharmaceuticals July 17, 2010 60 call option. Set a limit order to pay no more than $1.00 per option. Read More
Buy to open the Visa September 18, 2010 75 call option. Set a limit order to pay no more than $6.90 per option. Read More
Sell to close the Research In Motion September 18, 2010 65 put option at the market. Read More
Stocks are selling off again today, as concerns mount on the fragility of Europe’s banking sector after the Spanish government forced the merger of four institutions, including a bankrupt mortgage lender. The comparisons between Europe today and the US around the time of the Lehman Brothers collapse in 2008 are inescapable, though not identical. Read More
The market selloff means we’re doing quite well with our Research In Motion September 18, 2010 65 put option. Stick with it if you own it; new clients should hold off on purchasing the option. Though down today, copper has actually held up quite well, perhaps because… Read More