ORCL: http://finance.yahoo.com/news/oracles-3q-earnings-disappoint-122830931.html http://finance.yahoo.com/q/ks?s=ORCL+Key+Statistics http://investing.money.msn.com/investments/financial-statements?symbol=orcl http://finance.yahoo.com/q/bc?s=ORCL&t=5d&l=on&z=l&q=l&c= http://finance.yahoo.com/q/bc?s=ORCL&t=1y&l=on&z=l&q=l&c= Trade: Sept 26/21 bull put spread for $27 Yield = 27/473 = 5.7% in 182 days = 5.7(365/182) = 11.4% annualized Prob = 88% Expectation = .88(27) - .01(473) - .11(236) = 23.8 - 4.7 - 25.9 = -6.8 note: A slightly negative expectation is a warning sign that option prices are against us. With a heavy market like ORCL the MM's are sure to be on their toes and no gifts are to be expected. A return of $35 would produce an expectation of: .88(35) - .01(465) - .11(232) = 30.8 - 4.7 - 25.5 = 0 So I would need $35 instead of the $27 that was being offered by the market at closing. I will watch and wait for ORCL to stabilize and see if the MM's make us a better offer in the future, or I could try for the $35 at open to see if I get filled. Often in a dynamic market you can get filled 'out of market' at the open just due to opening volatility. In addition ORCL could fall further which would push option prices up but would also lower computed probabilities. Probably best to just wait.
http://finance.yahoo.com/news/oracles-3q-earnings-disappoint-122830931.html http://finance.yahoo.com/q/ks?s=ORCL+Key+Statistics http://investing.money.msn.com/investments/financial-statements?symbol=orcl http://finance.yahoo.com/q/bc?s=ORCL&t=5d&l=on&z=l&q=l&c= http://finance.yahoo.com/q/bc?s=ORCL&t=1y&l=on&z=l&q=l&c= Trade: Sept 26/21 bull put spread for $27 Yield = 27/473 = 5.7% in 182 days = 5.7(365/182) = 11.4% annualized Prob = 88% Expectation = .88(27) - .01(473) - .11(236) = 23.8 - 4.7 - 25.9 = -6.8 note: A slightly negative expectation is a warning sign that option prices are against us. With a heavy market like ORCL the MM's are sure to be on their toes and no gifts are to be expected. A return of $35 would produce an expectation of: .88(35) - .01(465) - .11(232) = 30.8 - 4.7 - 25.5 = 0 So I would need $35 instead of the $27 that was being offered by the market at closing. I will watch and wait for ORCL to stabilize and see if the MM's make us a better offer in the future, or I could try for the $35 at open to see if I get filled. Often in a dynamic market you can get filled 'out of market' at the open just due to opening volatility. In addition ORCL could fall further which would push option prices up but would also lower computed probabilities. Probably best to just wait.
ORCL: The expectation on that Sept 26/21 spread became zero today... with the spread yielding $35. http://stockcharts.com/h-sc/ui?s=orcl I think we will see sub 30 on ORCL especially if the market as a whole takes a pause as many expect it to. Still waiting
DRI: http://finance.yahoo.com/news/darden-3q-profit-falls-tops-112607535.html http://www.thestreet.com/story/1187...arden-restaurants.html?puc=yahoo&cm_ven=YAHOO http://finance.yahoo.com/q/ks?s=DRI+Key+Statistics http://investing.money.msn.com/investments/financial-statements?symbol=DRI http://finance.yahoo.com/q/bc?s=DRI+Basic+Chart Trade: Jan '14 40/35 bull put spread for a net credit of $61 Yield = 61/439 = 13.9% in 297 days or 13.9(365/297) = 17.1% annualized. Prob = 91% Expectation = .91(61) - .02(439) - .07(219)= 55.5 - 8.78 - 15.33 = 31.39
http://www.thestreet.com/story/1187...ve-below-are-buys.html?puc=yahoo&cm_ven=YAHOO http://finance.yahoo.com/news/ahead-bell-dollar-general-110554670.html Symb........Market Cap......P/E.........P/B.....Margin DG............17.2................18.3.......18.3......6.0% FDO............7.0................16.9........5.2.......4.4% DLTR.........10.9................18.0........6.5.......8.3% FIVE...........2.2..................NA........44.0......3.6% http://stockcharts.com/freecharts/perf.php?DG,FDO,DLTR,SPY DG Trade: http://finance.yahoo.com/q/bc?s=DG&t=1y&l=off&z=l&q=l&c= Nov 40/35 bull put spread for $30 Yield = 35/465 = 7.53% in 231 days or 11.9% annualized Prob = 88% Expectation = .88(35) - .04(465) - .08(232) = 30.5 - 18.6 - 18.6 = -6.7 The closing bid/ask on the spread was .25/.65. .35 is the min I would take.
SPY: http://www.forbes.com/sites/investo...alued-stock-market-peak-time-to-book-profits/ http://www.forbes.com/sites/investor/2013/03/25/three-etfs-to-short/ With the S&P at an all time high there are a lot of articles accumulating to say that the market is 'overvalued' http://finance.yahoo.com/q/bc?s=SPY&t=my&l=on&z=l&q=l&c= Of course there are also a lot of 'momentum' people who say 'The sky's the limit'. Here is a low risk trade to make a little money if the overvaluation thesis is true... and the market recognizes it by next December. Trade: With SPY at 156.19: Dec 170/172 bear call spread for a net credit of $41 Yield = 41/159 = 26% in 267 days or 36% annualized. Prob = 82% (it even has a positive expectation) Expectation = .82(41) - .15(159) - .03(80) = 33.6 - 23.8 - 2.4 = 7.4 Price.................P/L 150..................$41 155..................$41 160..................$41 165..................$41 170..................$41 175..................($159) 180..................($159)
CRL: http://finance.yahoo.com/news/ahead-bell-charles-river-laboratories-110804292.html http://finance.yahoo.com/news/mixed-4q-charles-river-195629464.html http://finance.yahoo.com/q/bc?s=CRL&t=5y&l=off&z=l&q=l&c= With CRL at 44.16 Nov 55/60 bear call spread for a net credit of $60 Yield = 60/440 = 13.6% in 226 days or 22% annualized Prob = 84% Expectation = .84(60) - .09(440) - .07(220) = 50.4 - 39.6 - 15.4 = -4.6 With a fill at $60 you get a neutral to negative expectation. Currently the bid/ask on the spread is .20/.60 So a fill at $60 is very unlikely... but possible and I need at least $60 to make a statistically sound trade. If CRL goes down on the downgrade it might make a better trade. I'll put this trade on the wait list.
CRL ct'd: CRL has indeed dropped: http://stockcharts.com/h-sc/ui?s=crl and has left my previous proposed credit spread with a credit of $0. New Trade: With CRL at 42.65 Nov 45/40 bear put spread for a net debit of $275 Price.............P/L 30................225 35................225 40................225 42.25...........0.0 45...............(275) 50...............(275)