If you have been following our blog, you may remember a few articles from the archive discussing risk-reward ratios and knowing the risks involved with the company before you place a trade. April 24th, 2006 – “Stock Market Research” July 21st, 2006 – “Learn the Risk Factors and Profit” September 14th, 2006 – “Company Earnings and Stock Options Straddle” The highest potential rewards in stock and options trading also carry the highest potential risks. Naturally these types of trades appeal to the risk taker in all of us. We are in the market to make money, so why shouldn’t we take the risk to make the most money?
Retail Investing – Returned +0.9% Return in Mar 07
In article, “Wal-Mart (WMT) Stuck in a Retail Rut”, we analyzed retail stores for a covered calls stock options strategy. In article, “Retail Investing – Returns Sweet +4% Return in Jan 07”, we selected positions for expiration in March of 2007, and even though the overall stock market was very gloomy, the strategy still returned +0.9, not bad considering the S&P500 index was down over 5% during the same time period.
Bearish on Subprime Lenders Returned +10.9% in Mar. 07
In article, “Subprime Lenders Are In the Bear House”, we outlined a bear call credit spreads stock options strategy for the subprime mortgage lenders. All four bear call credit spreads positions selected were profitable with an average return of +10.9%. Signup now for PowerOptions free 14-day trial The news on the subprime front is still gloomy. Mortgage lenders are tightening lending standards and many potential homebuyers are not able to find a mortgage lender willing to lend them the money to purchase a house or the borrowers now find the interest rates and/or required down payments unsuitable for their budgets.
CME Bull Put Spreads Strategy – Returned +10.5% in Mar. 07
In article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT (BOT), and in article, “CME Bull Put Spreads Strategy – Returned +7.5% in Feb. 07”, we illustrated the profit potential of a bull put spreads strategy for CME and we selected positions for options expiration in March of 2007, which returned a very nice +10.5% in 22 days.
Rowan Companies (RDC) Oil and Gas Drilling – Covered Calls
Many Oil and Gas companies have looked attractive to investors for the last few months. Many have said the scarcity of the resource and the price insensitive demand will ensure profits well over the horizon. Audio Podcast: An audio podcast of this article is available at: poweropt.com/podcasts/2007_03_22_RDC.mp3 Rowan Companies (RDC) provides a range of onshore and offshore contract drilling services in the United States and internationally. This stock is down substantially this year. The company significantly increased their capital expenditures last year ($200M in 2005 to nearly $500M in 2006). Another telling factor is their Net Income, less than zero three years ago, increased 50% in 2006 to over $300M.
Making Money on Credit Returns +3.5% in Mar. 07
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. Signup now for PowerOptions free 14-day trial In article, “Making Money on Credit Returns +4.8% in Jan. 07”, we selected a covered calls position for MasterCard (MA) for March stock options expiration and the position was fully profitable returning +3.5% in only 22 days!
Looking to Small Cap for Potential Profits
With analysts predicting the Feds will not cut interest rates because of inflation woes and Alan Greenspan saying publicly there is a 33% chance of recession, it leaves little for investors to be optimistic about. Noting this, we will take a look at promising small cap covered call option opportunities.
China – Hot, Cold or Lukewarm – Covered Calls
In recent articles, we’ve examined several of the world economies. In this article, we will examine the economy of China. China is the world’s fourth largest economy after the United States, Japan and Germany. China’s economy has grown phenomenally at a rate of over 10% over the last four years. China is the most populous nation on earth with 1/5 of the world’s population.
Two Exchanges May Enter Bidding War to Acquire the Chicago Board of Trade
IntercontinentalExchange (ICE) raises the stakes as it placed a competing $9.9 Billion bid for the Chicago Board of Trade (BOT). The Chicago Mercantile Exchange (CME) had been talking of a merger since last October. The CME was prepared to pay $8.96 billion for CBOT.
Germany – As Far As East Is From West – Covered Calls
In recent articles, we have focused on Japan, “Land of the Rising Sun is Looking Up”, and on Mexico, “Cure for Montezuma’s Revenge – Covered Calls”, and today we will examine Germany. Signup now for PowerOptions free 14-day trial Germany has the third largest economy in the world after the United States and Japan. After World War II, Germany was split into the German Democratic Republic (East Germany) and the Federal Republic of Germany (West Germany). In 1990, the two countries were reunited into one country.