Category: Stock Option Advisory

Dell (DELL) shares opened over 3% higher today following the company’s positive earnings report last night. The stock fell to a 1.5% gain as of 1 pm. The computer maker was able to beat estimates for sales and earnings in the first-quarter. The company also announced it would cut 8,000 jobs in the coming year. Some analysts, however, have expressed their displeasure lately as Dell is lowering its expectations by selling at lower margins. Some market watchers feel Dell’s abandonment of direct sales in favor of low-margin retailers such as Wal-Mart (WMT) is emblematic of the problem.

Cell phone companies have been in the news quite a bit lately. The industry is bustling with technology and innovation. This can be confusing to investors as evidenced by the sometime frantic and schizophrenic market.

Alltel Corporation (AT), the nation’s fifth-largest cell-phone provider (largest in terms of geographic area) announced Sunday night it has agreed to a deal to be acquired by the private investment firms TPG Capital (formerly Texas Pacific Group) and Goldman Sachs Capital as part of a $27.5 billion deal.

Investor’s Business Daily announces its top 100 stock picks each week using a proprietary formula. The PowerOptions weblog thought it might be interesting to take a look at the covered call possibilities.

With the economy chugging along in first gear, maybe its time to consider covered calls for consumer staples, for example companies involved in the food industry. Everybody eats, even when the U.S. economy is not performing well. But, maybe instead of USDA prime, we eat more hamburger or even chicken. Even when the economy isn’t doing so hot, companies involved in the food industry generally continue to perform ok.

In article “El Paso (EP) – Natural Gas – Covered Calls” we zeroed in on El Paso (EP) in light of Texas Utilities (TXU) decision to scrap coal based electrical power generating plants. With less coal in the power-generating picture, natural gas could be a piece of the future electrical power generation picture. Texas Utilities recently announced it plans to forge ahead with nuclear power plants to replace the scrapped coal plants, but nuclear power plants take many years to construct, so El Paso with its natural gas is still sitting in a sweet spot.

Not sure how to pronounce ‘Zdravstvuite’, but it’s hello in Russian. In article, “From Russia with Profits – Covered Calls”, we contemplated investing in covered calls for companies located in the country of Russia. Every Russian covered calls position selected was fully profitable, returning an average return of +7.5%. Former Russian President Boris Yeltsin died on Monday of this week. Boris Yeltsin will probably be most remembered for standing on a tank outside the Russian parliament building resisting a coup attempt.

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:

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.

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.