Comments on: How To Use Puts To Buy A Stock That Has Gapped Up https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/ Learn how to invest by selling stock options. Fri, 05 Jun 2015 15:31:37 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/#comment-23230 Fri, 05 Jun 2015 15:31:37 +0000 http://www.thebluecollarinvestor.com/?p=12256#comment-23230 Running list stocks in the news: MOH:

Molina Healthcare is a managed healthcare organization with government-sponsored programs such as Medicaid. It serves over 3 million members. The company boasts a 26% growth rate in revenues and 15% growth rate in enrollment over the past 5 years. On May 7th, MOH reported a stellar 1st Quarter earnings report, beating earnings estimates and a revenue increase of 53% year-over-year. There have been 3 positive surprises in the past 4 quarters averaging a surprise of 12.9%

Our Premium Running List shows MOH in the Medical industry segment which ranks “A”, a Scouter of “5”, a beta of 1.39 and adequate open interest for near-the-money strikes. The next projected earnings report date is 8-7-15.

Alan

]]>
By: Alan Ellman https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/#comment-23222 Wed, 03 Jun 2015 21:54:46 +0000 http://www.thebluecollarinvestor.com/?p=12256#comment-23222 Premium members:

This week’s 6-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site. The report also lists Top-performing ETFs with Weekly options.

For your convenience, here is the link to login to the premium site:

http://www.thebluecollarinvestor.com/member/login.php

THANKS FOR MAKING OUR PREMIUM MEMBERSHIP SO SUCCESSFUL.

NOT A PREMIUM MEMBER? Check out this link:

http://www.thebluecollarinvestor.com/membership.shtml

Alan and the BCI team

]]>
By: Alan Ellman https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/#comment-23217 Wed, 03 Jun 2015 11:04:50 +0000 http://www.thebluecollarinvestor.com/?p=12256#comment-23217 Running list stocks in the news: AVGO:

Last week, Avago Technologies price rose by 11.5% after a stellar earnings release and announced deal to buy Broadcom (BRCM, also on our running list). Over the past 4 quarters, AVGO has averaged a 19% positive EPS surprise.

This outstanding company has an impressive history. It was originally part of Hewlett Packard and then spun off as Agilent Technologies which later went private as Avago. The IPO for the “public” AVGO occurred in 2009. Last year the company bought LSI Logic and became part of the S&P 500.

Our Premium Watch List shows AVGO to be in the Chips industry currently ranked “A”, a beta of 1.65, a Scouter rating of “10”, a % dividend yield of 1.00, adequate open interest for near-the-money strikes and the last ex-dividend date as 3-18-15.

Alan

]]>
By: Alan Ellman https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/#comment-23212 Tue, 02 Jun 2015 17:34:52 +0000 http://www.thebluecollarinvestor.com/?p=12256#comment-23212 In reply to Karl.

Karl,

You pose an excellent question that does not have one simple answer. It’s like asking a baseball manager how to get a runner into scoring position: should we bunt, hit-and-run or steal a base. All are a means to an end just different ways of achieving a common goal.

Our investment goal is to achieve the highest returns while staying within our personal risk tolerance requirements. Those parameters will differ from one investor to another although most of us are conservative investors.

Ex-dividend dates: Unless there are associated tax issues, who cares if our shares are sold. That means we have maxed our trade and have the cash freed up to generate additional income streams. If we are determined to keep a dividend-yielding stock, sell the option the day after the ex-date or sell a 2-month option moving expiration further away from the ex-date thereby decreasing the likelihood of assignment.

Earnings reports: Two choices here: Sell the stock prior to the report date of hold through earnings and then sell the option after the price settles. This adds risk to the strategy but also may allow for higher returns when we experience positive surprises. This decision depends on our personal risk-tolerance. I use this latter approach infrequently but have used it in the past with companies like AAPL and CSCO and more recently with ILMN and SWKS.

Alan

]]>
By: Alan Ellman https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/#comment-23211 Tue, 02 Jun 2015 17:15:52 +0000 http://www.thebluecollarinvestor.com/?p=12256#comment-23211 In reply to Jay.

Congrats to Pete…love to hear the great news.

Jay, thanks for the suggestion. It’s already in the queue…near the front but we are working on a few other projects first.

Alan

]]>
By: Karl https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/#comment-23210 Tue, 02 Jun 2015 17:12:59 +0000 http://www.thebluecollarinvestor.com/?p=12256#comment-23210 Alan,

If I own a stock I understand not to sell a covered call if earnings date and/or ex dividend date come before expiration date. Assuming everything else being equal what do I do? 1. Hold on to stock until above dates are passed and receive no monthly premium? 2. Sell stock and buy a new position on list and write a covered call thus getting a premium for the month? 3. Sell a OTM naked put on a new stock thus getting stock put at a lower price or keeping the premium? I prefer #3. Am a bit confused. Read your books.

Thanks,
Karl

]]>
By: Alan Ellman https://www.thebluecollarinvestor.com/how-to-use-puts-to-buy-a-stock-that-has-gapped-up/#comment-23204 Tue, 02 Jun 2015 11:39:34 +0000 http://www.thebluecollarinvestor.com/?p=12256#comment-23204 Running list stocks in the news: TASR re-invents itself:

In my first book, “Cashing in on Covered Calls”, I admitted to buying way too much TASR because option returns were so high as a result of the stock being so volatile during the trial years of their stun guns (early 1990s). I learned a valuable lesson.

After all these years, TASR has caught my attention but this time for all the right reasons. It has a great story to tell. In addition to the $164 million per year generated by stun gun sales, it now also produces body cameras for police officers and has an established relationship with those who would buy these products. TASR also recently released EVIDENCE.COM, a cloud-based hosting arena for offices to upload such files. There are now 22,000 users of EVIDENCE.COM up 45% from last quarter.

As a result, consensus estimates for this year and next has risen as analysts are recognizing the potential for growth.

Our Premium Watch List shows a ranking of “B” for its Business Services industry, a beta of 1.33, adequate open interest for near-the-money strikes, a Scouter rating of “5”, and a projected earnings report due date of 7-30.

In the past week, chart technicals have turned a bit bearish so I am waiting for an uptick in momentum indicators before entering a position with TASR but definitely keeping a close eye on this one.

Alan

]]>