Category: Stock Option Advisory

In the article, “CME Buying CBOT”, we analyzed Chicago Mercantile Exchange’s (CME) purchase of CBOT with an eye for a bullish strategy for CME. We continued the CME bull put credit spreads saga and for the month of August the strategy experienced a very nice +8.7% return. This strategy has returned over 82% in only nine months. Last month’s CME bull put credit spreads position came the closest to backfiring, as the price of CME stock fell to 505.89 on Thursday August 16 the day before options expiration. If the price of CME’s stock had remained below 530 at the market close on options expiration on Friday August 17, then the position would have experienced a loss of -91.3. And instead of enjoying a nine-month return of 82% we would have instead the ugly experience of an -18% loss over nine months. But fortunately the price of CME’s stock recovered…

In our June 6th article entitled, “What do Health Food Supermarkets and Satellite Radio Have in Common? The FTC, Mergers, and Option Investing Opportunities”, we reported on the potential deal between Whole Foods Market and Wild Oats. Now the stock of both companies has risen around 5% since then and the merger looks likely to go through. Today, we will look again to both of these companies and explore potential Covered Call trading ideas.

Earlier in the year the CEO of AT&T (T), Edward Whitacre, made remarks about how Google was getting a free ride on the network his company created and should be made to pay higher usage fees. Google (GOOG) was predictably troubled by the comments, since under their current operational model AT&T could do a number of things to disrupt their service and profitability.

PowerOptions offers many tools to help options investors find lucrative trades and develop strategies. One of the most powerful and exciting tools it offers its customers is the SmartHistoryXL back testing tool.

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.

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 June, the strategy returned a very nice +11.1% return. This strategy has returned over 63% in only seven months. The bidding war between CME and ICE for CBOT appears to be about over, as ICE has decided not to up the ante. Even if for some reason the CME/CBOT merger does not come to fruition, CME is looking bullish and using PowerOptions powerful stock options tools to search for potential candidates returned the following bull-put credit spreads stock options position:

There are some businesses investors consider, as a rule, profitless. Airlines, passenger trains, and, at least recently, newspapers all seem to be ‘profitless pariahs.’ The airline industry, since deregulation in the late 70s, has had a hard time regularly pleasing investors. Considering it is cheaper now, in real dollars, to fly from New York to Greece than it was in 1965, it is no wonder the profits have sometimes been elusive.

The Senate passed legislation yesterday requiring the production of ethanol used in auto fuel to increase to billion gallons a year by 2022. The final production level would increase the level of ethanol production seven times the current level. Senate Majority Leader Harry Reid, in a widely covered press conference, proclaimed, “This bill starts America on a path toward reducing our reliance on oil.”

Burger King (BKC) went public in May 2006 and has seen a doubling of its stock price since August of 2006. If you were paying attention to our blog in 2006, you might recall the article “Burger King (BKC) – Whopper Covered Calls”. The stock has gained over 50% since we wrote the article.

Ameritrade’s (AMTD) owners want the company to partner with “one of its industry peers.” Two heavily invested hedge funds, JANA Partners and S.A.C Capital Advisors, are calling for the change. Their combined ownership amounts to about 8.5%, or around 50 million shares, of the company’s outstanding stock.