The LEAPS Trader
105 W. Monument Street
Baltimore, MD 21201
Thursday, April 26, 2007
Email – #368
** Earnings Season perks up the portfolio
We are in the midst of earnings season, and several of our positions are perking up nicely.
Teva Pharmaceuticals (Nasdaq: TEVA) has been on a tear lately, and it is scheduled to report on May 2nd. So far, the guidance from the company has exceeded expectations and I expect it will be the same this time. We are also benefiting from a resurgence in the pharma sector, where Teva is by far the largest generics drugs company in the world.
Microsoft (Nasdaq: MSFT) reports earnings after the close today – a good report and guidance should boost shares over that magical $30 level. It’s high time for some good news from Mr. Softie, especially after the recent Vista release. MSFT is also a prime beneficiary of the weak US dollar, with a good chunk of its sales coming from overseas.
Our S&P 500 MITTS (AMEX: MCP) is setting all-time highs as the S&P rallies higher. Move your sell-stop on this position to $12.50.
Freeport Copper and Gold (NYSE: FCX), one of our bull spreads, is also heading higher in fine fashion. Our spread was the $60/$70, and right now we are at the upper end of the spread and up more than 40% on this position. However, with so much time left on the position, the options decay on the upper end of the spread will not kick in for a few months.
General Motors (NYSE: GM) will report earnings soon as well.
Last week, GM executives said that sales were not robust, blaming the sub-prime sector for the most recent warning. However, today, Ford reported better-than-expected numbers. But this should not be the case with GM, which is facing issues much worse than Ford.
GM still has outside-the-box investments in companies like Delphi and still faces sub-prime liability through its GMAC division, which was sold to private equity groups… with a provision that GM was responsible for certain shortfalls. But, in this market, anything can happen.
We are short GM, and we will hold the position through earnings. If the shares break the $30 level, we will continue to hold. If they head north and break $33, we will sell our put position.
Good trading,
Karim
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Current Portfolio:
Company / Symbol: Coeur D’Alene (NYSE: CDE)
Option / Symbol: Jan. 09 $2.50 call (ZYB AZ)
Date Purchased: 4/17/07
Current Price: $2.15
Comment: Hold.
Company / Symbol: General Motors (NYSE: GM)
Option / Symbol: Jan. 08 $27.50 put (WGM MY)
Date Purchased: 3/13/07
Current Price: $2.55
Comment: Hold.
Company / Symbol: Nasdaq 100 Index (Nasdaq: QQQQ)
Option / Symbol: Jan. 08 $40 put (WD MN)
Date Purchased: 11/27/06
Current Price: $0.68
Comment: Hold.
Company / Symbol: Nasdaq 100 Index (Nasdaq: QQQQ)
Option / Symbol: Jan. 08 $48 call (YWZ AV)
Date Purchased: 11/27/06
Current Price: $1.10
Comment: Hold.
Company / Symbol: Microsoft (Nasdaq: MSFT)
Option / Symbol: Jan. 08 $30 call (WMF AF)
Date Purchased: 8/8/05
Current Price: $1.89
Comment: Hold.
Company / Symbol: S&P 500 MITT (AMEX: MCP)
Date Purchased: 7/18/03
Current Price: $13.27
Comment: Hold.
Company / Symbol: Chesapeake Energy (NYSE: CHK)
Option / Symbol: Jan. 08 $35 call (WZY AG)
Date Purchased: 4/25/06
Current Price: $2.45
Comment: Hold.
Company / Symbol: Advance Micro Devices (NYSE: AMD)
Option / Symbol: January 2009 $35 call (VVV AG)
Date Purchased: 6/21/06
Current Price: $0.30
Comment: Hold.
Bull & Bear Spreads
Company / Symbol: Freeport (NYSE: FCX)
Option / Symbol: Jan. 09 $60 call (OMT AL)
Date Purchased: 3/5/07
Current Price: $18.40
Comment: Hold.
Company / Symbol: Freeport (NYSE: FCX)
Option / Symbol: Jan. 09 $70 call (OMT AN)
Date Purchased: 3/5/07
Current Price: $12.80
Comment: Hold.
Company / Symbol: GoldCorp (NYSE: GG)
Option / Symbol: Jan. 09 $30 call (OPJ AF)
Date Purchased: 6/9/06
Current Price: $3.30
Comment: Hold.
Company / Symbol: GoldCorp (NYSE: GG)
Option / Symbol: Jan. 09 $40 call (OPJ AH)
Date Purchased: 6/9/06
Current Price: $1.30
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: $2.75
Comment: Hold.
Company / Symbol: Teva Pharmaceutical (Nasdaq: TEVA)
Option / Symbol: Jan. 08 $45 call (WTX AI)
Date Purchased: 5/23/06
Current Price: $0.90
Comment: Hold. Sold call against January 08 $40 position.
