Stock news outlets are notorious for providing lists. Recently, Jim Cramer’s website reported on stocks with huge insider purchases and buybacks. Barron’s Magazine also routinely runs articles on this subject. Today in the PowerOptions weblog, we’ll take a look at the list and then explore option trading ideas using this information.
Audio Podcast:
An audio podcast of this article is available at: poweropt.com/podcasts/2007_07_12_Insider.mp3
| Signup now for PowerOptions free 14-day trial |
The theory when it comes to investing in stocks with large amounts of insider buying is you will be able to capitalize on the investing savvy of those more connected and informed about the future of the stock.
| Signup now for PowerOptionsApplied 30-day risk free trial |
SCHW:
Charles Schwab, the San Francisco brokerage firm, recently said it will buy back more than 100 million shares. This constitutes around 7% of the company’s outstanding shares.
TEK:
Tektronix recently added $350 million to its share-buyback program. The company considers itself a leading worldwide provider of communications network management products.
CHK:
Chesapeake Energy’s CEO Aubrey McClendon recently purchased 101,500 shares for about $3.5 million. Chesapeake retrieves oil and natural gas from a variety of underground sources.
COGN:
Cognos recently announced a $200 million dollar buyback which constitutes a doubling of the size of its current stock buyback plan. The company will repurchase up to 8.9 million shares, or 10% of the public float. The company’s primary product is an operational and financial planning tool so businesses can get a handle on their future resource requirements and, hopefully, produce shareholder benefiting business results.
TIE:
Titanium Metals recently had a 10% stakeholder purchase an additional 50,800 shares or $1,585,000 worth of stock.
Looking at this News from an Options Trading Perspective:
These trades could be good for fit for a long term option trading technique as outlined in the PowerOptions training article, Covered Call Tutorial, under the heading Summary of Investor alternatives in a rising market.
PowerOptions‘ award winning search tools are exactly what an options investor requires to find desirable trades. Call PowerOptions at 877-992-7971 to start your free trial.
Potential Trades:
All of the following option trades have 37 days until expiration. These trades were discovered using the powerful suite of option search tools found at PowerOptions.
| Covered Call Search | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Company Name |
Symbol | Stock Price |
OPTION | Strike Info |
Option Bid |
% Dnsd. Prot. |
% If Unch. |
% If Asgnd |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Titanium Metals Corp. | TIE | $33.97 | TIEHG | 07 AUG 35.0 (37) | $1.60 | 4.7 | 4.9 | 8.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cognos Inc. | COGN | $40.29 | CRQHV | 07 AUG 42.5 (37) | $0.65 | 1.6 | 1.6 | 7.2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Tektronix Inc. | TEK | $34.61 | TEKHG | 07 AUG 35.0 (37) | $0.95 | 2.7 | 2.8 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chesapeake Energy Corp. | CHK | $35.06 | CHKHG | 07 AUG 35.0 (37) | $1.30 | 3.7 | 3.7 | 3.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cognos Inc. | COGN | $40.29 | CRQHH | 07 AUG 40.0 (37) | $1.70 | 4.2 | 3.7 | 3.7 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Charles Schwab | SCHW | $22.01 | SHQHX | 07 AUG 22.5 (37) | $0.35 | 1.6 | 1.6 | 3.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COGN – There are two covered call trades mentioned for the Cognos stock. The first, a trade using the $42.50 call option, offers a robust 7.2% potential profit with a thin 1.6% downside protection. The second, more conservative, choice is a trade offering 3.7% potential profit with 4.2% downside protection using the $40 call option. Cognos is currently trading at $40.29.
Competitors for COGN include: Business Objects SA (BOBJ), Microsoft Corporation (MSFT), Oracle Corp. (ORCL), Actuate Corp. (ACTU), Hyperion Solutions Corp. (HYSL), and Microstrategy Inc. (MSTR).
TEK -The Tektronix trade has a reasonable 4% potential profit and 2.7% downside protection. The trade utilizes the $35.00 call option. The stock is currently trading at $34.61.
Competitors for TEK include: Agilent Technologies Inc. (A), Anritsu Corporation (private), and Rohde & Schwarz GmbH & Co. KG (private).
CHK – The Chesapeake offers 3.7% potential profit and 3.7% downside protection. A potentially very good trade if you like the stock. It also exemplifies the type of trades a user of the PowerOptions site can easily identify.
Competitors for CHK include: Anadarko Petroleum Corp. (APC), BP plc (BP), ConocoPhillips (COP), Arena Resources Inc. (ARD), Pioneer Natural Resources Co. (PXD), Plains Exploration & Prod. Co. L.P. (PXP), and Questar Corp. (STR).
SCHW – The Schwab trade offers 3.9% potential profit with 1.6% downside protection. Not bad, as good option positions on this stock are increasingly hard to come by as investors maintain their bullish outlook.
Competitors for SCHW include: E*TRADE Financial Corp. (ETFC), FMR Corp. (private), The Jones Financial Companies, L.L.L.P. (private), Ameritrade Hldg. Corp. Class A (AMTD), Etrade Group Inc. (ET), and Trade Station Group Inc. (TRAD).
For more information about how to identify and research great option trades, visit the PowerOptions website. There you will find the data you need to make quick, clear, and informed decisions. You can trade knowing you have found the best investment. Also, PowerOptions will allow you, with a few quick clicks, to quickly and accurately compare trades. PowerOptions‘ premium customer support is second to none in the industry. They can be easily contacted when you need them at their toll-free number to answer customer questions. Call them now toll free at 877-992-7971.
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] Jim Cramer, Barron’s Magazine, Anritsu Corporation, Rohde & Schwarz GmbH & Co. KG, FMR Corp., The Jones Financial Companies, L.L.L.P., A, Agilent Tech. Corp., ACTU, Actuate Corp., AMTD, Ameritrade Hldg. Corp. Class A, APC, Anadarko Petroleum Corp., ARD, Arena Resources Inc., BOBJ, Business Objects SA, BP, British Petroleum Co., COP, ConocoPhillips, ETFC, E*Trade Financial Corp., MSFT, Microsoft Corp., MSTR, Microstrategy Inc., ORCL, Oracle Corp., PXD, Pioneer Natural Resources Co., PXP, Plains Exploration & Prod. Co. L.P., STR, Questar Corp., TRAD, Trade Station Group Inc., covered call investment strategy, investment strategy, iron condor, options trading, poweroptions, stock option trading, stock options [/tags]