Stocks and Trading Thread - Channeling your inner Mono

[Tamas]

almost as if a widely covered apple-related event gave a lot of free publicity for their products.

[Ed Anger]

Netfux is being sued in a class action suit by former shareholders.

http://www.marketwatch.com/story/pomerantz-law-firm-has-filed-a-class-action-against-netflix-nflx-2012-01-27

Ouch. But hey maybe you and I can get five bucks or something. I owned NFLX at some point during that time frame. 

A five dollar coupon off 1 NES game. 

[Phillip V]

[img]http://www.optionmonster.com/cms/drj_blog/images/chart-of-the-day-iphone-activations-q4-jan-26-2012.jpg[/img

almost as if a widely covered apple-related event gave a lot of free publicity for their products.

Indeed. I blame Steve Jobs. Many people emotionally bought iPhone 4S even though it was not a major revision.

However, iPhone 5 may come earlier around June, and it will indeed have a whole new form factor + 4G LTE connectivity. These people will have to upgrade. Luckily, I bought the stock around Thanksgiving, and my position is now up 20%. [/quote]

[Ed Anger]

Amazon down 20 in pre-market.

My reaction:

[Alcibiades]

How come, any idea?  I've been considering picking  them up.


Edit:  Ah, didn't meet expectations.  Not sure If I should grab it or not.   

[MadImmortalMan]

How come, any idea?  I've been considering picking  them up.


Edit:  Ah, didn't meet expectations.  Not sure If I should grab it or not.   

It's been drifting steadily upward all day since the overnight crash. Certainly it has believers. P/E is still 141, but hey.

[Admiral Yi]

Amazon PE is at 141?? WTF??

MIM, *if* my SLB ever rises enough to flip, my thought is to sell puts on AT&T (since I wouldn't mind owning it).  I could use some hand holding from you on first ever options contract, if you don't mind.

Still a big if obviously.

[MadImmortalMan]

DougKass Douglas Kass
I am buying PBI now - just modestly raised its dividend to 37.5 cents/quarter - yielding 7.8%. BETTER THAN A MONEY MARKET FUND! $PBI

Douggie ranting on twitter. Pitney-Bowes has a P/E of only 10, yields a buck fifty and is currently trading at $19.20 a share. Some of you were asking about dividend payers.

[Admiral Yi]

Of course it's better than a MM fund, they're paying less than a percent right now.

[MadImmortalMan]

Selling puts is a great way to go, but the downside to it is you have to make sure you have the cash available to make the purchase if they get exercised. You can do significantly better than the dividend yield of the underlying security, and you get the money up-front. There is also the bonus if your brokerage account pays you interest on your cash holdings. Which makes the reserve cash not so much a problem. You earn on both the cash and the put premium.

Time is your friend in that situation. Go out several months in the future for the expiration to make it worth it. T February puts are selling for 8 bucks right now. Go out to October and it's more like 200 each for near the money puts. (Those seem to be the best ones, with the value increasing more slowly after that.) January 2014s are at 340. You get less for going nearer in time or farther away from the current trading price. Doing either of those things reduces the risk that they will be exercised, so duh.

Each one is a hundred shares worth of stock control, so keep enough cash to buy the stock at the strike price you choose x 100. So if you sell 10 T Oct 27 puts, you will need to have $27k of buying power if exercised. The cash you got from selling the puts counts toward that of course, in the case of the Oct 27, that would have been $1150 for the ten if you did it today (they are going for 115).

If the stock never gets down to your strike price, you keep the cash and can do it again. It's not a problem to do it in very small numbers of options either.

[Admiral Yi]

Well, I would only have enough cash for 1, 2 at the most T puts, so it looks like I will have to go long-dated so the fee doesn't eat my premium.

Check my math for me.  T is paying a 6ish dividend right now, and 115/2,700 = 4.25 (plus the handful of basis points Etrade throws me on the sweep).  Not really sure if that's a winner.

[MadImmortalMan]

6%=1.5% per quarter. October is 3 quarters away, not four. So you're comparison should be against the 3 quarters of dividend (1.5%x 3=4.5%)

It's either that or 4.25% today + whatever rate you get from eTrade on your cash.

It's very close in this case.

If you don't mind owning the stock here, you might consider selling covered calls instead. Buy the T shares and sell calls against it to get a little more out of it. That way you collect the dividend as long as you hold it. You don't need to hold the cash then. The risk is that you might have your shares called away if your sold calls go in the money. T Oct 30 calls are selling for 130 right now. 31s for 84.

Owning 100 T and selling the 30 calls would get you the 4.5% over the three quarters plus (130/3000=4.33%) call premium = 8.33% as long as the calls aren't exercised. I would probably shave that a little, since the 30 strike is a bit too close for my comfort.

[Admiral Yi]

That seems like maybe a better idea. 

Although I don't know about the riskiness of the 30 calls.  T price moves like a glacier.

[Alcibiades]

DougKass Douglas Kass
I am buying PBI now - just modestly raised its dividend to 37.5 cents/quarter - yielding 7.8%. BETTER THAN A MONEY MARKET FUND! $PBI

Douggie ranting on twitter. Pitney-Bowes has a P/E of only 10, yields a buck fifty and is currently trading at $19.20 a share. Some of you were asking about dividend payers.

Recommend this for a long term hold?

[MadImmortalMan]

Recommend this for a long term hold?

I would based on the numbers I've bothered to look at, yeah. It's a great yield and low valuation, all other things notwithstanding. It looks like the kind of thing you add to the 401k and don't fuss over. PBI's business isn't one that I've followed closely though. I think I'll look them up on edgar.


Edit--More: http://seekingalpha.com/article/332622-an-almost-8-yielder-that-gets-no-love-from-the-market