The LEAPS Trader
105 W. Monument Street
Baltimore, MD 21201
Tuesday, August 8, 2006
Email – #331
** A Good Long-Term Play… But Not for LEAPS
Every once in a while I run across a nice long-term play that just does not fit with our LEAPS strategy… for whatever reason.
In this case, it is Dow Chemical (NYSE: DOW). While we’re not adding DOW to our LEAPS Trader portfolio, I urge you to consider the opportunity here…
The company reported slightly lower-than-expected numbers recently, and the shares sold off. But, it appears to be a good investment opportunity and I would like to share it with you. (For my other service, the Income Trader , we will be following this pick, but for much more conservative returns.)
The selloff has brought the company’s price into super bargain territory. Based on current prices around $36, the shares are trading at less than 10 times next year’s earnings – on top of a 4.2% dividend. Unfortunately, the LEAPS are just too pricey right now to make it a worthwhile pick. But as a standalone investment, it is a very interesting proposition.
Most of the damage for DOW was created by higher energy prices. On the flipside, its global operations, including Asia, were huge positives and should continue to do well for the producer of plastics and agricultural and non-agricultural chemicals.
Oh, I almost forgot. Company insiders have been buying it like it is going out of style… since the earnings announcement.
Good trading,
Karim
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Current Portfolio:
Company / Symbol: Hilton Hotels (NYSE: HLT)
Option / Symbol: Jan. 09 $25 put (VHL ME)
Date Purchased: 7/18/06
Current Price: $4.00
Comment: Hold.
Company / Symbol: Equity Office Properties (NYSE: EOP)
Option / Symbol: Jan. 09 $30 put (OLH MF)
Date Purchased: 6/22/06
Current Price: $2.70
Comment: Hold.
Company / Symbol: Microsoft (Nasdaq: MSFT)
Option / Symbol: Jan. 08 $30 call (WMF AF)
Date Purchased: 8/8/05
Current Price: $0.95
Comment: Hold.
Company / Symbol: S&P 500 MITT (AMEX: MCP)
Date Purchased: 7/18/03
Current Price: $11.45
Comment: Hold.
Bull & Bear Spreads
Company / Symbol: AMD Micro Devices (NYSE: AMD)
Option / Symbol: January 2009 $35 call (VVV AG)
Date Purchased: 6/21/06
Current Price: $3.40
Comment: Hold.
Company / Symbol: AMD Micro Devices (NYSE: AMD)
Option / Symbol: January 2009 $45 call (VVV AI)
Date Purchased: 6/21/06
Current Price: $1.60
Comment: Hold. Sold call against January 09 $35 call position.
Company / Symbol: CBOE Volatility Index (WCB: ^VIX)
Option / Symbol: Feb. 07 $15.00 call (VIX BC)
Date Purchased: 5/3/06
Current Price: $3.20
Comment: Hold
Company / Symbol: CBOE Volatility Index (WCB: ^VIX)
Option / Symbol: Feb. 07 $17.50 call (VIX BW)
Date Purchased: 6/14/06
Current Price: $2.55
Comment: Hold. Sold call against Feb. 07 $15 position.
Company / Symbol: GoldCorp (NYSE: GG)
Option / Symbol: Jan. 09 $30 call (OPJ AF)
Date Purchased: 6/9/06
Current Price: $9.50
Comment: Hold.
Company / Symbol: GoldCorp (NYSE: GG)
Option / Symbol: Jan. 09 $40 call (OPJ AH)
Date Purchased: 6/9/06
Current Price: $7.50
Comment: Hold. Sold call against January 09 $30 position.
Company / Symbol: Teva Pharmaceutical (Nasdaq: TEVA)
Option / Symbol: Jan. 08 $40 call (WTX AH)
Date Purchased: 5/23/06
Current Price: $3.40
Comment: Hold.
Company / Symbol: Teva Pharmaceutical (Nasdaq: TEVA)
Option / Symbol: Jan. 08 $45 call (WTX AI)
Date Purchased: 5/23/06
Current Price: $2.00
Comment: Hold. Sold call against January 08 $40 position.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan. 08 $35 call (WZY AG)
Date Purchased: 4/25/06
Current Price: $5.20
Comment: Hold.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan. 08 $45 call (WZY AI)
Date Purchased: 4/25/06
Current Price: $2.20
Comment: Hold. Sold call against January 08 $35 position.
Company / Symbol: Energy Select SPDR (AMEX: XLE)
Option / Symbol: Jan. 07 $39 put (ORJ MM)
Date Purchased: 3/1/05
Current Price: $0.15
Comment: Hold.
Company / Symbol: Energy Select SPDR (AMEX: XLE)
Option / Symbol: Sell Jan. 07 $37 put (ORJ MK)
Date Sold: 3/30/05
Current Price: $0.25
Comment: Hold. Sold put against January 07 $39 position.
