Items Tagged With Options

A Visit to the Intel Options Cocktail from March
Written By: David Neubert
2007-07-09 11:30:53
Based on a reader comment from Alex, I decided to update my Intel cocktail from March.

"Question: INTC stands today at 24.68. Are you still in these positions, as declared on 3/21/07? The stock is up 30% from your 17.41 "cocktail cost"...what're the results of your investment, now that the underlying security has surpassed the 22.50 calls? "

Here's the mark to market:

Stock: $24.93 - $18.99 = $5.94 profit
$12.50 puts: $0.02 - $0.13 = $0.11 loss ($0.22 for 2x)
$17.50 puts: $0.14 - $0.95 = $0.81 profit
$22.50 calls:$3.65 - $0.80 = $2.85 loss
Dividends collected $0.1125

$5.94 - 0.22 + 0.81 - 2.85 + 0.1125 = $3.79
Had I just bought the stock, I'd have a higher profit ($5.94) but a bigger downside. I'm sticking with this position for now. I'll stick with it to get to my max profit profile. Though I never see anything wrong with exiting a position early, as the downside becomes much larger than the upside (this is often the case with deep in the money options positions).

Disclosure: I am still in the options position described. I also have a little bit of an overage in terms of stock position on which I outright long. I recently sold a small about of INTC (not part of this position).

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Added to Position in AIG
Written By: David Neubert
2007-07-11 16:41:56
I paid $68.27 to add my position in (AIG $68.64) today. The P/E is under 12. The company is growing nicely with many business lines and is still being punished for insurance scandals past. There is pretty big open interest in the $70 strike options for expiration next week, which should act as a kind of anchor. Until then, I've left myself room to buy a bit more if it falls further.

I bought back a small short position in July 70 strike puts today as well.

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Adding to my General Electric Exposure by Selling Puts
Written By: David Neubert
2007-06-06 17:00:11
Every hedge fund is long their little portfolio of favorite stocks and short the market. For almost everyone, "short the market" means short S&P500 futures or SPY (the ETF that represents the S&P 500). With a market cap of $386 billion and representing 2.9%, General Electric (GE - $37.29) is the second largest company in the index (#1 is Exxon (XOM - $83.62). So with nearly every hedgie operating in U.S. markets short GE, what do I want to do? OWN IT!

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Fear of Interest Rates Rising Sends Annaly (NLY) Lower: I Bought
Written By: David Neubert
2007-06-06 19:24:37
As Annaly (NLY - $14.50) got clobbered today, I did a little trade to make sure I'm buying Annaly near book value. Structured as a REIT and passing through 90% of earning for shareholders, Annaly Mortgage is a great way to earn dividends/mortgage interest.

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Four Names I Bought This Week
Written By: David Neubert
2007-03-08 04:48:28
I've been watching you at the dance. And now I finally have the nerve to walk across the room...

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