In article, “Visa – Plastic Money – IPO”, we analyzed the credit card industry and illustrated how profitable a covered call strategy for credit card companies can be. We continued down the covered calls credit card investing path and for April of 2007 a return of 3% was experienced. Since we began the covered calls credit card strategy six months ago, a very nice total return of 19% has been observed. The credit card covered calls investment strategy has worked so well we will go for it again for next month’s stock options expiration. Using PowerOptions stock options search tool, we found the following position for stock options expiration in May of 2007:
Month: April 2007
CME Bull Put Spreads Strategy – +9.9% in Apr. 2007
In article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT (BOT) with an eye for a bullish strategy for CME. We continued the CME bull put credit spreads saga and for the month of April, the strategy returned a very nice +9.9% return. Overall the CME bull put credit spreads strategy has returned a whopping 40% return in only five months!
Bearish on Subprime Lenders Returned +12.4% in Apr. 2007
In article, “Subprime Lenders Are In the Bear House”, we outlined a bear call credit spreads stock options strategy for the subprime mortgage lenders. We’ve continued to go bearish on the subprime lenders and for April 2007, both positions we selected were fully profitable returning a very nice average return of 12.4%. The news on the subprime front is still gloomy. The inventory of unsold homes is very high and subprime borrowers are defaulting on loans at a very high rate.
Canadian Covered Call Investing Returned 2.1% Apr 2007
In article, “Canadian Investing Eh? – Covered Calls”, we considered investing in Canadian covered calls stock options positions. The selected positions returned an average of 2.1%, in only 23 days. Fourteen of the seventeen positions were profitable, and nine of the seventeen positions were fully profitable. The biggest loser of the selections was NRMX with a return of -13.5%, but the loss was not nearly as large as if the position had been a straight long position, which would have returned a very ugly -23.8%. Neurochem’s (NRMX) stock slipped after the FDA extended an action date for one of the company’s potential pharmaceuticals. Investing in biotechnology companies is one of the more risky investment strategies available.
Income Tax Investing Returns 5.2% Apr 2007
In article, “Income Tax Investing – Covered Calls”, we investigated investing in covered calls stock options positions for companies involved in the income tax industry. Every position selected was profitable and the average return experienced was 5.2%, in only 18 days. Uncle Sam’s not going away, so we searched for covered calls stock options positions for income tax related businesses and the results are shown below.
Investing in Green Companies – Covered Calls
Today, PowerOptions takes a quick look at companies specializing in alternative energy and potential covered call opportunities. Audio Podcast: An audio podcast of this article is available at: poweropt.com/podcasts/2007_04_19_AltEnergy.mp3 Signup now for PowerOptions free 14-day trial Because the price of gasoline has lately been the focus of so much consternation, alternative energy company’s stock prices may increase as their products become more widely accepted.
Qwest (Q) Exec Nacchio Found Guilty – A Look at Qwest’s Future.
Joe Nacchio, a former AT&T (T) executive, was hired by Qwest Communications in 1996 to evolve the company into a major telecommunications competitor. However his monomaniacal pursuit, a Colorado jury found yesterday, led Nacchio to participate in illegal insider trades. He also, in the company’s relentless drive to meet revenue projections, did not appropriately inform investors of the financial risks the company was taking.
Freddie and Fannie Jumping Into Subprime
Freddie Mac (FRE) and Fannie May (FNM) announced they plan to jump into the subprime mortgage arena. The housing industry has been in the doldrums for several months now after a few years of furious activity. The low interest rates fueling the housing boom have abated, and some neighborhoods are now awash in unsold homes. The subprime mortgage lenders who aided and abetted the housing boom are in dire straights as their creditors have dried up their supply of cheap easy credit.
Milking Profits with Dean Foods (DF) – Covered Call
Last week, Dean Foods (DF) issued a special $15 per share dividend to stockholders. Following the dividend, the stock dropped about $15. It is typical for a stock to drop the amount of the dividend. However, the stock gained close to 8% since last week.
Earnings May Signal Success of Yahoo! (YHOO) Panama Advertising Project
Last Year, Yahoo (YHOO) overhauled it’s online advertising sales to more closely mimic the model set by its competitor Google (GOOF). Yahoo called the project ‘Pamana’ to in some way compare it to the colossal undertaking of trenching a canal to join two bodies of water. The power of the metaphor is somewhat questionable, but the business idea, at least on the surface, was somewhat sound.