Bunge Jumped - Covered Option

Bunge jumped very nicely in the two days after earnings.
(or should that be Bungy jumped...lol)

Seems to be stalling at its technical resistance around $72.50. Covered the Feb $70 put which was sold on Thursday for $.20. The small remaining yield did not seem worth the risk of holding for a few more days. This option trade yielded 2.2% of risk capital in 2 days!

Still bullish on Bunge and will be looking for ways to add a second lot to this trade on any pullback.

Favorable Winds of Change at Xerox

Xerox stock appears to be attractively valued. The company has set earnings expectations for next year at $1.05 to $1.10. At a p/e of 12 yields a price of $13, or 20% up from here. These fundamentals indicate an opportunity might exist in this stock. However, numbers never tell the whole story. It is always important to look beyond the numbers to see what changes are going on at a company. In the case of Xerox it appears it appears there several changes underway that support the fundamental case for the stock.

Read more about the winds of change at Xerox that could blow some profits into your portfolio at

http://seekingalpha.com/article/252415-changes-at-xerox-have-it-poised-to-make-gains-for-your-portfolio

Bunge - Earnings update

Bunge announced earnings today. As you will recall, there was a wide range of estimates on the street. Earnings beat not only the average estimate but the highest estimate. Revenue was near the top end of the analysts range. The company declined to give 2011 guidance. This always seems to make wall street uncomfortable. I suspect this is part of the reason the stock did not react that positively today. ( the cynic in me says this is just because now they just can't parrot back company guidance to their clients.... but I digress). When taking longer term positions for investments, I prefer the stability of a more steady prediction of earnings from a company but from the mid term trading perspective of this holding this uncertainty can actually be beneficial. Hopefully it will keep volatility high and increase the chance for short-term profits and covered call strategies.

Given the earnings seemed to contain no major negative surprises, it is time to add the second lot of the trade. Prior to adding a lot, I cleaned up the prior options "insurance" by selling off the protective put for a whopping $.10 net of commission. That means the "insurance" for buying before earnings cost a net $.90. In hind sight, not a good policy to write, but better safe than sorry. To try to establish the second trading lot, I sold one lots worth of Feb $70 puts for $1.85. Either one of two things will happen next week
a). the stock will stay under $70 and the portfolio will be long a second lot of stock at a net price of $68.15 . That is over a 1% discount from just buying the stock today, and obviously I am comfortable owing these shares
b). the stock will bounce over $70 and the put can be covered for a 2% one week gain and we will need to look for another way to get a second lot of the stock.

Positions - Boeing Covered Option

Boeing hit $72.50 and looks to be pausing at this resistance level on the chart. I bought back the March $70 puts sold about 2 weeks ago for a little more than $1. Tactically, this option trade made just less than $2 or 2.7% of risk capital in 2 weeks.


Still bullish on Boeing. However, the air force tanker decision might be getting close to announcement. This will likely move the stock in one direction or the other

Own 1 lot of shares, and looking for a cost effective way to accumulate more lots. Will consider re-establishing an options position on a short term pull back towards $70. Either a similar trade (put sale) or perhaps a strangle to try to capitalize on any move from the tanker decision.

Positions - A lower risk position in gold via options

There are many opinions on the direction of the price of gold. Some believe gold is in a bubble and will be below $1000 soon. Others think gold is the only true store of value and will be surging past $1500 in the not too distant future. There is of course no sure way to know which of these scenarios will come to pass. There is however, a lot of solid analysis that indicates having a long gold position in a portfolio is a good diversification strategy. (i.e. hopefully if equities and bonds pull back, gold will not)

If you believe in the positive diversification aspects of having gold in a portfolio, there are a few basic alternatives to gain gold exposure in your portfolio such as buying the Gold ETF (GLD) Gold Miners ETF (GDX). However, options on these equities provide another approach to gaining exposure which might minimize the risk in the event of a fall in the price of gold.

Learn more about a low risk option based approach to getting gold exposure in your portfolio at:

http://seekingalpha.com/article/250942-reducing-the-risk-of-gold-exposure-in-a-portfolio-through-options

Trade - Hershey Vday Trade closed

The speculative trade in Hershey for v-day went wrong from the beginning. I guess the "cocco crisis" was more powerful than v-day. The stock bounced positively on earnings today.
So maybe I was not "wrong" just "early" on the purchase.....lol

Anyway, I used the earning bounce as an opportunity to cut loses and close out the trade at $48.49. This speculative trade lost just under 1%. Fortunately this was only a one lot position .

Still... it makes me depressed enough to eat some chocolate!

Trade - Bunge Establishing a hedged position prior to earnings

In general there is reason to be long term bullish on Bunge. This is mostly from a strategic perspective as it provides exposure to two positive macro level trends via its core agribusiness and exposure to Emerging Markets. However, in the recent past not all of the Bunge story has been positive. This situation has created a lot of short-term uncertainty which could translate into a great long term opportunity.

Read more about establishing a hedged initial position in BG prior to its earnings at:

http://seekingalpha.com/article/250032-bunge-starting-a-position-now-could-mean-long-term-growth?v=1296586155&source=tracking_notify

Positions - Boeing Early Board Annoucment

Boeing reported earnings and guidance this week that disappointed the street. However, there appears to be some signs that the clouds could be lifting, and Boeing could be getting ready to take off. Read more about why it might be time to get on board now and some specific suggestions for establishing a position in Boeing at:


http://seekingalpha.com/article/249485-boeing-early-boarding-for-investors-seeking-good-mid-term-prospects

Hershey - Vday Trade

Over the years, my undocumented observation has been that Hershey stock gets more attention (and hence volatility) than usual prior to Valentines day. I have been successful in the past buying in Jan and selling in early Feb. (Kind of like buying on the rumor of Valentines day and selling on the news..lol). I know that is somewhat unhealthy reason to buy a stock, but I've tasted success in the past with this approach and every once in a while you need to have some fun while trading.

So earlier this year I had set an alert in my account if Hershey stock fell. Hsy had been grinding up this month, but fell over a percent this morning. Technically this nearly filled the up-gap from an upgrade on the 13th. I bought one lot at $48.92. I don't expect to be in this speculative trade too long. Specifically earnings are 2/2 so I hope to be out of the trade before that event. Hopefully, I can get a gap reversal that lets me go to the store to buy some chocolate to celebrate! Either that or take a small loss and eat chocolate to help cure my depression over the trade....seems like a win/win!

Full disclosure: I am an admitted choc-aholic!

Intel Options Strategy Change

A comment at Seeking Alpha by "bcfran" n the recent Intel article suggested that a way to play the solid foundational support for Intel was with $15 Jan 13 Leaps that could be purchased at almost no premium over intrinsic value. The more I thought about that the more it made sense to me.

http://seekingalpha.com/article/246682-intel-soaring-through-the-clouds

So, I covered the short $22 Mar puts that were put in place in conjunction with the last post at an inconsequential gain and acquired one lots worth of $15 Jan 13 Calls at $6.35. This increases the leverage on the overall Intel position. Hopefully that leverage will prove useful sometime over the next two years. Over time, hopefully there will be some opportunities to hedge away some of the risk related to this leverage might present themselves.