Break-even:  I break-even on this trade if JPM closes at $36.60 on June 15, 2012.

Unprofitable:  I lose money on this trade if JPM closes under $36.60 June 15, 2012.  The most I can lose on this trade is the amount I paid can be worth $1 minus the price I sold it for, $.40 for a total of $.60.  

Reason I Like This Trade:  JPM has sold off on some terrible news about their investments.  I want to take a Bullish stance, but I do not want to risk too much money.  If this strategy I can make if JPM is flat, goes down less than 1% or rallies.  

UPDATE 5.14.2012  With a sell-off in the stock market and JPM this Put Spread has increased to $.49 in value.  I will leave this Spread on and not look to add as I think JPM has plenty of time between now and June to rally back.  

UPDATE 5.15.2012  With the stock rallying back today, this Spread is currently worth $.44.  I will leave this Spread on as I think JPMorgan sell-off might be overdone.   

UPDATE 5.16.2012  This Spread is still worth $.45, but I will leave it on, because I am making an even movey bet that the stock will rally by June expiration.

UPDATE 5.21.2012  With more JPM news coming out everyday I am glad that I didnt not a big position as this Spread is now worth $.80.  I will leave this on for a potential bounce higher.

UPDATE 5.22.2012  This spread is worth $.75 and I should probably take it off as I think that JPM and the stock market are headed 

UPDATE 5.24.2012  Since this spread can only go to $1, I will leave it on, but not add to it at all, because the banks look so weak.

JP Morgan was downgraded to hold after reporting its loss this morning and joining it was roundy’s from outperform to neutral. Roundy’s first quarter sales were down 2.4% and this sent their stock tumbling to 10.21 down over 16%. I find humor in Pick n’ save blaming the packer’s early playoff loss for their poor sales performance. ProShares are showing some huge gains at the moment with UltraPro leading the charge up over 400% to 49.24. They announced their share splits on Wednesday.
Advocat is up close to 70% to 7.33 after Covington Investments, who is currently a 12% shareholder, offered to buy the company for 50m, or 8.50 a share.
Arena Pharmaceuticals is also up big to 5.86 almost a 60% increase upon recommended approval of the company’s obesity pill Lorcaserin.

Contributer Chris Rygh is currently pursuing his MBA in Wisconsin and has a passion for the Market. Comments can be directed to ryghcw19@uww.edu

Yahoo is a Disaster

Here’s a prime example of a company that can’t do anything right. There’s an asset that has millions of visitors every day, Yahoo is my homepage, yet they can’t figure out how to monetize it. This has to be one of the most inept boards out there right now. You have an activist investor in Dan Loeb that is trying to affect change at Yahoo yet the board spends their time attacking him. This is the same board that is on their third CEO in just a short time. They fired their last CEO Carol Bartz via a phone call because it was going to leak and they wanted her to find out from them. The next CEO turns out to be embellishing his resume with a degree in Computer Science that he didn’t get. In such a high profile position it is amazing that he hasn’t been fired yet. This kind of public embarrassment will make his credibility with Wall Street nil. My favorite item about this is the board member who led the search for the new CEO got paid $15k to do so. Dan Loeb wants her to return the money and says if they replace board members with his slate one of his members will do this for free. In reality there are a few basic responsibilities of the board and one of them is determining who will steer the ship. I would presume that means one of their basic duties is to hire a CEO when needed. I find it odd that a board member being paid handsomely to be on said board with plenty of cash and stock options, would require an additional $15k to do something she should be doing anyway.

Investing Lesson

What I’ve taken from all this nonsense lately is that unless you have a really transformative CEO such as Steve Jobs, don’t be relying on management quality in your investment thesis. With what we’ve seen recently with companies such as Chesapeake, Yahoo, Avon, and many others is that Peter Lynch was right.

There is no shortage of village idiots running companies today.

Commodity futures have everything, crude, natural gas, gold and silver, down at the moment with gold hitting its lowest of 1573.29 since January 3rd. The world’s number 2 economy, China, continues to slow and worry investors after a weak first quarter performance, The producer price index is down -.2% for April, with adjustment actually at .2%without food and energy. This index measures the average change in prices received by domestic producers of goods and services. Student loans holding you down, think again says the Ivy league. Yes they are more expensive, however they give out grants and you may end up owing less than the typical college. As of next fall students whose family makes under 65,000 per year will pay nothing to attend Harvard according to a recent reuter’s article.

Europe had strong gains in the finance realm with National bank of Greece and Banco Santander both up over 5%, and Deutsche Bank and Barclays also incrementally up.  The Networking and communication industry took a hit today down almost 10%, riding Cisco all the way, they finished down over 10.5%. ADY overtook Startek and finished with the highest percent gain up almost 49% to 8.71. Tesla motors had a big day with shares up over 11% overcoming a first quarter drop in revenue and profit with news that it’s electric Model S will be delivered in June, a month ahead of schedule.  InfoSpace(INSP) was another heavy hitter up 24% after better than expected first quarter results. A first positive look at the deficit was presented today in the treasury budget report. The treasury had a surplus of 59.1b in April, the first monthly surplus in over 3 ½ years. This stomps the deficit down to 719.9b remarkably lower than the 869.8b a year ago.

Break-even:  I breakeven on this trade if TLT closes at $119.30 on June 15, 2012.

Unprofitable: I lose money on this trade if TLT closes above $119.30.  The most I can lose on this trade is the amount the spread can be worth $1 minus the Price I sold it for $.30 for a total of $.70.  I think that Bonds are headed lower and the unability for TLT to rally above $119 makes this a great risk vs reward trade.  

UPDATE 5.11.2012  TLT has rallied very hard and is above the $119 level, but I will leave this trade on because I think that Bonds are headed lower.

UPDATE 5.14.2012  TLT has rallied HUGE and the only think I can say is I am glad that this is not a HUGE position.  This spread is currently worth $.52, but since it is a June position I will leave it on.  

UPDATE 5.15.2012  TLT has rallied again today, but I think the summer rally will help this trade out.  I will leave this trade on.

UPDATE 5.16.2012  It seems as if this Spread goes up in value, it is currently worth $.60, but I am not looking to add to this position.

UPDATE 5.21.2012  Another trade that went Rogue, I will leave this trade on and hopes that the TLT will sell off.

UPDATE 5.22.2012  Another trade that I should probably have added at $.90 yesterday or look to take it off today at $.70.  I will look to take this trade on and move on.

UPDATE 5.24.2012  With the TLT selling off again today, this spread is worth $.70.  I will leave this trade on.

UPDATE 5.29.2012  I still believe in this trade, I might have not picked enough time for this trade though.  I will leave this trade on, because I have already defined my risk vs reward. 

UPDATE 6.4.2012  This spread is worth $.90 and I will look to take it off as the trade went against me and trying to capture any part of the money back.  

Bloomberg released a grim consumer comfort index which fell to -40.4 for the week ending May 6. This is a struggling level associated with recessions, down from -37.6 the prior week, its third week down in a row. Personal finances fell to -11.2 its’ weakest since November 11’. Natural gas in storage rose to 30 billion cubic feet. No surprise as this commodity has been up all week. Cisco remains down as premarket trading implied currently at 17.11 down close to 9%. The hot stock today is Startek(SRT) up over 50% to 2.78, with first quarter revenue at 50.9 million, a .6% decrease from last quarter, however revenue offshore increased 18% and their gross margin is up 10.5% this quarter.Losing today are Silicon graphics(SGI), down 25% to 6.87 and not far behind is Clean Diesel Technologies down almost 19% to 2.88.

The Madrid Index was up 2.06% as was today after the Spanish Government took over the country’s 4th largest bank, Bankia, by taking a 45% stake. The IBEX was also up over 2.5% which has lost over 20% since mid-March. This also helped stabilize the Euro up to 1.2966 after hitting lows yesterday. Crude is lower yet today due to pressure from china while natural gas is up. Gold is wavering however currently up .50 to 1594.20 while silver remain down.  Cicso is one to watch today down about 8% in premarket trading although its revenue climbed 6.6%. The trade gap is at a -51.8b for March from February’s 45.4b.  New unemployment claims are at 367k, with new claims down 1k. This is still higher than the 360k levels through March. Import pricing is down -.5% from a prior change of .4%, these are for product that are bought in the US but produced abroad.