FLENJANOMICS

LOLAmerica

2011-01-19T23:28:00.000-05:00

Apparently the best way to get rich in America is to find funny pictures of cats and put humorous captions in them! Check out this article in the WSJ.

I personally like dogs over cats, so heres a picture of a dog who just found out he's not the father!

Long Ford

2011-01-19T13:28:00.003-05:00

The chinaman is buying up cars like its going out of style. They have begun to auction off licence plates via lottery to limit the amount of congestion and emissions. While this limits sales, they are still auctioning off 20 million of them. Why not buy some Ford to take advantage of this!

Perhaps finance it with the sale of some AAPL put options!

sell 1 apple Jan 12 255 put for $10.60

buy 5 F jan 12 25 calls for .70 and 5 Jan 13 25 calls for 1.82

HPQ Buy-write

2011-01-19T13:22:00.002-05:00

Buy 100 HPQ = (4,624)

Sell 1 HPQ Jan 12 $45 put 425
Sell 1 HPQ Ja 12 $50 Call 310

Net costs: (3,889)

Profit if HPQ >50 in Jan 12: 1,110/3,889 = 28.5% on a stock that needs to go up by 8% in 11.5 months

Go Apple go!

2011-01-19T09:20:00.002-05:00

Looking to buy some Vertical Call Spreads this week or next. Looking at $10 wide strikes and trying to get in for a net debit of $5 in order to realize profits of 100% or greater. 355/365 strike is around $4.50 this am.

2011-01-17T15:09:00.003-05:00

Farmville profits with Monsanto

2011-01-13T22:06:00.003-05:00

Buy/write on Monsanto:

This one has had quite a run, but I still believe this will be a profitable trade.

Buy 100 monsanto (7,478)
Sell 1 Jan 12 72.5 Put 980
Sell 1 Jan 12 75 Call 995
-------------------------------------
Total outlay 5,503

Profit if called in Jan 2012: 1,980/5,503 = 36% plus any dividends collected will increase your percentage.

If monsanto is below 72.5 on Jan 12, you can either roll your short put out to a later date or buy 100 more shares at a net cost of 62.7. This trade is still profitable down to the 60ish price.

Coinstar

2011-01-13T21:37:00.002-05:00

Coinstar was slammed after hours for lowering guidance. Down 25%. Look for selling puts or scalping a bounceback.

Why I started this blog?

2011-01-06T01:11:00.003-05:00

This blog is a place for me to share my investment ideas as well as anything else I find interesting, humorous, or just feel like venting about.

I read alot of blogs about investing and personal finance. The reason for this is that I want to be in control of my own finances rather than handing my money to some "professional" who will charge fees or just investing in mutual funds that don't truly have your best interest at heart. Hopefully, I can help myself while helping others learn to invest better. I mainly prefer to invest using combinations of equities and option strategies. This helps me boost my returns and manage risk.

I use strategies such as buy-write combos, selling naked puts, covered calls, synthetic combos, and other option strategies. Rarely do I just buy stock and hold it. This is because it is expensive, the risk is always the same, and its not as interesting.

Below is an example of the type of trade I prefer to do:
American Express (AXP): Current price 45.04

Buy 100 shares of AXP: ($4,504)
Sell 1 Jan 12 $45 put:       $572
Sell 1 Jan 12 $50 call :      $330

Total cash outlay:             $3,602

This should only be done on stocks that you think are poised to rise, that you don't mind owning for the long-haul, and that you wouldn't mind owning at a lower price than it's at currently.

Risk: The risk is that between now and Jan 2012, AXP could drop and your short $45 put will be exercised. You will be forced to take ownership of AXP at $45 per share, but because you sold that put it will be like owning it at $39.28 ($45-5.72 put premium received). This will allow you to lower your basis by the amount of premium collected.

Reward: If AXP is >$50 on Jan 12, your stock will be be called away and you will received $5,000 and keep the $572 collected for the put sold and the $330 collected for the call sold. Your return will be $1,398 ($496+572+330) plus any dividends received. This is a 39% return on a stock that only needs to go up by 11%.

If AXP >$45 but <$50, your call and put will expire worthless, but you will still own the stock and can hold it or sell more calls against it.

Breakeven on trade: On original 100 shares its 45.04 - 3.30 call premium = 41.74

On the put shares, its the $45 strike price less the 5.72 collected or 39.28

The overall breakeven would be: $40.51 or 10% below the current price. This trade will can lose 10% and still be profitable. As opposed to just buying AXP outright, this seems like the much safer option!

Welcome

2011-01-05T21:23:00.000-05:00

Welcome! This is my blog I created to share ideas and learn ideas from others. I will mainly use it to blog about investing and personal finance, but also will blog about anything else as I see fit because it is my blog.