The LEAPS Option Trader
105 W. Monument Street
Baltimore, MD 21201
Thursday, October 28, 2004
Email – #207
** Powering Forward
Last week I wrote to you about the comfort level I had with our LEAPS portfolio and why I think it is imperative that we understand that time is on our side. With LEAPS, we create our own market and we use leverage to limit our downside.
This week the market has reversed and that small reversal, along with excellent earnings reports from our holdings, has led to a major turn upward in our positions. Our profitable positions are more profitable and our laggards have recovered nicely.
Today Dynegy announced much better than expected numbers and the stock is up 5% and the option more than 10%. IACI has recovered as the price of oil declined and the major airlines are doing a better job with restructuring. This bodes well for the travel side of IACI and our options are back to breakeven, up more than 50% in the past week.
Forest Labs came out with super earnings and we are back to even on our spread. Our Intel position is up 25% in a week, thanks to resurgence in the semiconductor sector.
Lucent reported much better numbers and is beginning to climb steadily daily.
Placer Dome is soaring and so are our options – we are up almost 300% in this position to date. Chesapeake continues to plug along nicely as natural gas prices hit new records. We are up more than 2,000% on this position.
Even Nokia is coming back to life, as the oversold situation in the shares is now correcting itself. It may seem like a long shot, but we may yet pull even on Nokia.
In every case, we have more than a year or two years left. This time frame provides us a terrific opportunity to load up the profits. The volatility in the market benefits our style of investing tremendously as it injects added fuel into the volatility component of our options, making them worth more in a shorter time frame if the markets continue upward.
Regards,
Karim Rahemtulla
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Current Portfolio:
Company / Symbol: Intel (Nasdaq: INTC)
Option / Symbol: Jan. 06 $22.50 call (WNL-AX)
Date Purchased: 10/19/04
Current Price: $3
Comment: Buy
Company / Symbol: Forest Labs (NYSE: FRX)
Option / Symbol: Sell Jan. 06 $55 call (WRT-AK)
Date Purchased: 10/6/04
Current Price: $2.60
Comment: Hold. Sold call against Jan. 06 $50 position.
Company / Symbol: Forest Labs (NYSE: FRX)
Option / Symbol: Jan. 06 $50 call (WRT-AJ)
Date Purchased: 10/6/04
Current Price: $4.10
Comment: Hold. No TS.
Company / Symbol: Interactive Corp. (Nasdaq: IACI)
Option / Symbol: Jan. 07 $25 call (VSW-AE)
Date Purchased: 9/14/04
Current Price: $3.40
Comment: Hold. No TS.
Company / Symbol: Lucent (NYSE: LU)
Option / Symbol: Jan. 06 $5 call (YXL-AA)
Date Purchased: 5/25/04
Current Price: $0.40
Comment: Hold. No TS.
Company / Symbol: Dynegy (NYSE: DYN)
Option / Symbol: Jan. 06 $5 call (YNY-AA)
Date Purchased: 5/25/04
Current Price: $1.05
Comment: Hold. No TS.
Company / Symbol: Placer Dome (NYSE: PDG)
Option / Symbol: Sell Jan. 06 $25 call (YDI-AE)
Date Purchased: 4/1/04
Current Price: $2.10
Comment: Hold. Sold call against Jan. 06 $20 position.
Company / Symbol: Placer Dome (NYSE: PDG)
Option / Symbol: Jan. 06 $20 call (YDI-AD)
Date Purchased: 1/23/04
Current Price: $4.10
Comment: Hold. No TS.
Company / Symbol: Nokia (NYSE: NOK)
Option / Symbol: Sell Jan. 06 $30 call (WIK-AF)
Date Purchased: 2/9/04
Current Price: $0.05
Comment: Hold. Sold call against Jan. 06 $30 position.
Company / Symbol: Nokia (NYSE: NOK)
Option / Symbol: Jan. 06 $22.50 call (WIK-AX)
Date Purchased: 8/29/03
Current Price: $0.40
Comment: Hold. No TS.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Sold Jan. 06 $15 call (WZY-AC)
Date Purchased: 11/6/03
Current Price: $2.85
Comment: Hold. Sold call against Jan. 06 $12.50 position.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan. 06 $12.50 call (WZY-AV)
Date Purchased: 7/28/03
Current Price: $4.50
Comment: Hold. No TS.
Company / Symbol: S&P 500 MITT (AMEX: MCP)
Date Purchased: 7/18/03
Current Price: $10.20
Comment: Buy under $10. No TS.
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Bio:
Karim Rahemtulla is the former Investment Director of The Oxford Club. The editor of The Smart Options E-Report, The Income Trader – A Covered Call Strategy and The LEAPS Option Trader, Karim is also a regular contributor to The Oxford Club Communiqué. His highly successful trading systems use covered calls and LEAPS to boost returns on blue chip stocks, and during the bear markets of 2000 and 2001, his picks outperformed the major market averages. Educated in England, Canada and the U.S. and fluent in several languages, Karim travels the world to find the best investment opportunities for our members.
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