The most I can lose on this trade is the amount I paid for these Calls, $.56
Reason I like this Trade: Using unusual options activity again, I noticed a customer sell June 2.5 Puts in ARRY for $.25. I went $.30 bid on these Puts and could not get filled. I put in a $.25 bid on the Puts this afternoon and got filled. I want to get long ARRY with a possible POP back to $3.20, so I turned these Puts into Calls buy buying stock against them. The Price of a Call w/o dividend or interest in Put Price and Stock Price minus Strike Price. I paid $.25 for these Puts and bought $2.81 stock, so $.25 + $2.81 – $2.50 gives me a $.56 Call. This stock only has to rally back to above $3 by June in order for this Trade to be a HUGE winner. Stay tuneds for more updates.
UPDATE 2.15.2012 These Calls are worth about $.55 and the stock have been moving less than in previous months. Since I have until June, I will wait it out until I get an upside POP.
UPDATE 2.16.2012 The stock did rally up to $2.87 and it got me real excited, but now the stock is back down to $2.80. Someone sold more June 2.5 Puts today for $.25 wanting to get me even more bullish and I will continue to play to the upside.
UPDATE 2.21.2012 This trade has not been a winner, but has not been a loser, but I have over 4 months until a POP in this stock so I will leave this trade on until further notice.
UPDATE 2.23.2012 With stock selling off $.04, these Calls are worth $.55. I would rather see the stock move up and down, down and up instead of flat lining. This is a BIG position, but I think ARRY could consoldate here then get a POP higher to $3.20
UPDATE 3.9.2012 With the stock rally higher and the options market being very illiquid, I sold stock at $2.97 and $3.07. This is a winning trade, but nothing a winner until the position closed.
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Avon Products posted weaker than estimated results today as sales decreased in every market except Latin America. Revenue fell 4% or 3 billion dollars. However, Mexico sales were up 12%. Volume Tuesday was huge and Avon is to continue paying dividends in 2012. I wonder if this stock will still trade up after reporting bad earnings and stating a crappy outlook. Activision Blizzard beat on earnings and raises dividend. Activision is now trading at a 13x P/E. Will it ever trade at a 20x P/E again? In my opinion, Activision is a steal right now for long term investors. The only issue right now is whether stocks have huge market cap. Michael Kors up big today after beating analysts’ earnings expectations. Kors hit a fresh 52 week high today up 23% at $42 a share. Kors has a market cap almost 10x its revenue. Zynga is up 5% today in anticipation of its earnings announcements after the close today. Has someone possibly leaked a little bit of the earning news?? Nevertheless, look what GRPN PPS did after reporting.. We are seeing a lot of people selling the Feb $15 Calls at $.95 today.
Tuesday is going to be a quiet day in earning announcements as Borgwarner, Metlife, Avon and Goodyear Tire set to report. Also, U.S. data Tuesday includes retail sales and business inventories at 10 a.m. The NFIB small business survey is released at 7:30 a.m. The world will be watching the Greek Parliament on Wed to see if the austerity vote will pass, or if they need more time. After Masco hits a fresh 52 week high on Monday, they reported a loss of 9 cents a share. Revenue for the three months ending Dec. 31 rose 1% or $1.74 billion from $1.72 billion. Shares down over 10% in after hours action.
Shipping stocks were some of the most unloved companies in 2011 but so far in 2012, they have shown some incredible strength. Diana Shipping (DSX) is currently sitting above its 200-dma for the first time in over two years. The stock closed up 7.30% to $9.53 today. It rallied off of DryShips’ (DRYS) earnings that were announced in pre-market today. DRYS has been on an absolute tear lately and has been up 7 days in a row. It closed up 11.33% today to $3.34. The stock is up over 55% so far this year. It appears that $135.60 is a tough level for the SPY to break through and has shown resistance here on 2/9 and today.
Reason I like this Trade: AAPL is a beast and I am looking to get long on any dips. I do not think there is anything that can derail AAPL right now, a stock split or a dividend would both make the stock rally even higher. The IPad 3 should be awesome with a new HD screen, lighter, and faster. Then there will be a possibility of a Macbook Pro upgrade this year with possibilities of a new iPhone and AAPL TV. This is more of a position than a trade, so I will not be looking to take any partial profits, just add more if the stock sells off. Also, watch out for the possible IBrick this year.
UPDATE 2.16.2012 With AAPL raging to $526 and now trading at $490, I think AAPL is a buy on any pullback and as I talked about, this is more of a position than a trade, so I will leave it on for more upside.
UPDATE 2.21.2012 With a rally in AAPL, but volatility staying high this spread is currently worth $15.50. As I talked about, this is a position, not a trade, so I will not add to it, but I will not take it off either just yet.
UPDATE 2.24.2012 With a rally in AAPL, but volatility staying high this spread is currently worth $13.00. IF AAPL breaks $530, I will add and sell more Put Spreads.
UPDATE 3.1.2012 With AAPL rallying almost everyday I look to get LONG any pullbacks. This spread that I sold for $16 is now worth $11.50 and I am leaving this position for more profit.
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