Yesterday, this blog touted Apple (AAPL) – primarily because of their sexy new iphone. But Jim Cramer says no to lawsuit-beleaguered Steve Jobs’ empire. So, today let’s pull up our sofas and potato chips and dissect what the popular cable sage has delivered. However, we must insist that the first step in Mr. Cramer’s process ought to be “listen to PowerOptions’ Podcast” as an antecedent to getting rich.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_01_12_JimCramer.mp3
In a report from thestreet.com website, it is noted that everyone is focused on Apple when they really should be paying attention to Sony (SNE). This is a surprising notion in the wake of a Christmas season where the electronics manufacturer left tens of thousands of potential sales of their Playstation3 withering on the vine because of a well-publicized supply issue.
This is what Jim Cramer had to say, “I want to look at companies that have failed and what management has and can do for them. That’s why its time to look at Sony” while everyone is focused on Apple.
He called the two stocks “polar opposites.” Cramer essentially makes a case that Sony has substantial value, but is being written off. Does Apple have less room to grow? Does Sony offer great value at fire sale prices? Well, it might not fit into the Warren Buffet’s Berkshire Hathaway model, but there may be something in this point of view.
Cramer makes the point that Sony is worth $45 billion, but it is likely to have $70 billion in revenue. On the other hand, Apple is worth $82 billion and is likely to have $23 billion in revenue.
The energized commentator goes on to call Sony an unloved “revenue machine.”
Competitors:
Competitors for SNE include: Matsushita Electric Industrial Co. Ltd. (MC), and Koninklijke Philips Electronics NV (PHG).
Using PowerOptions’ powerful search tools, lets delve into some bullish option trades for Sony for February.
| Covered Call – SONY INC (SNE) $ 45.65 (37 Days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPTION | Strike Info |
Opt Bid |
% Dnsd. Prot. |
% If Inch. |
% If Asgnd |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SNEBI | 07 FEB 45.00 | $2.00 | 4.40% | 3.10% | 3.10% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bull-Call Debit Spread — SONY INC (SNE) $ 45.65 (37 Days) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sell Opt |
Strike Info |
Bid Price |
Buy Option |
Strike Info |
Ask Price |
% Return |
Break Even |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SNEBI | 07 FEB $45 | 2 | SNEBH | 07 FEB $40 | $6.10 | 22.00% | $44.10 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The covered call trade, an in the money covered call, offers 4.4% downside protection and a potential profit of 3.1% (37 days) if the stock remains unchanged or rises.
The second trade is a bull call debit spread. This trade offers 22.0% potential profit if the stock remains above $45.00. If the stock decreases below the break-even price of $44.10, the investment begins to lose money. If the stock price goes below the lower strike price of $40.00, the entire investment is lost. The net cost of this trade is $410.00 per option contract.
For more information about how to identify and research great option trades, visit the PowerOptions website. PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades and you will find the data you need to make quick, clear, and informed decisions. With PowerOptions tools, you can trade knowing you have found the best investment for your risk/reward profile. PowerOptions provides a toll-free number (1-877-992-7971) for customer support (PowerOptions’s customer support is second to none in the industry) for answering customer questions.
PowerOptions provides a free 14-day trial of its service. So join PowerOptions today, and you too can start reaping the benefits of the covered call investment strategy.
PowerOptions’ sister company PowerOptionsApplied provides expert stock option trading recommendations. PowerOptionsApplied specializes in covered calls, naked puts and iron condor stock options strategy recommendations. PowerOptionsApplied provides a 30-day risk free trial of its service.
[tags]iphone, Jim Cramer, Steve Jobs, thestreet.com, Playstation3, Warren Buffet, Berkshire Hathaway, AAPL, Apple Computer Inc., MC, Matsushita Elec. Indus. Co. Ltd., PHG, Koninklijke Philips Electronics NV, SNE, Sony Corp. ADR, covered call investment strategy, investment strategy, iron condor, poweroptions, stock option trading, stock options[/tags]