Email – #411
Just wanted to send a quick note that Mylan Labs (NYSE: MYL) reports its earnings before the market opens tomorrow.
You should know that it could have quite an impact on the share price. More than 21% of the float on Mylan is sold short and if the company’s reports better-than-expected numbers or guidance, we could see one heck of a pop.
On the flipside, if it disappoints, we could see the shares trade lower. We have LEAPS that don’t expire for almost two years on this play, so while we hope for a nice spike, we have the comfort of knowing that we will still have seven more quarters of releases to look forward to if we don’t.
In our favor is the rash of insider buying going on at Mylan about six months ago. Insider activity usually predicts an outcome within a year of the buys. Let’s hope they are very good early indicators!
ViroPharma (Nasdaq: VPHM) also reports earnings tomorrow. With this position, we’re interested in its guidance on the current studies it has underway. We’ll update both if there is a change in our position based on the news.
QQQQ’s And Coeur
Elsewhere, our PowerShares QQQ (Nasdaq: QQQQ) put spread is doing exactly what we wanted it to – moving up when the QQQs head down, and moving down when they go up.
Why is that a good thing? Well, when you put on a spread, both sides of the spread move in the same direction – and although this initially limits our gains, because of time value, it also limits our losses. Worst case: We take a small loss on the spread, but that would mean the rest of our position is heading higher.
Speaking of heading higher, our Coeur d’Alene (NYSE: CDE) silver position is doing just that – up more than 25% in recent days. Remember, we have almost one year to go with the precious metals rally.
Unisys (NYSE: UIS) is also moving up nicely, despite the fact that the company’s bond ratings were put on negative credit watch the other day.
This isn’t as bad as you might think though. Dig a little deeper and you’ll see that the ratings were put on negative watch because the company announced that it was seeking ways to boost shareholder value . This usually means aggressive moves like a stock buyback, which makes stockholders (and option holders) very happy at the expense of bond holders.
Our bank options are floating around, waiting for a breakout. I am not worried, because we’re in at very good prices and are quite profitable in many cases, with a lot of time left to go.
I’m currently researching a couple of new opportunities, so look for a new play as early as next week.
Karim
Current Portfoli
Company / Option: Unisys Jan. 2010 $5 calls
Option Symbol: WUI AA
Current Price: $1.30
Comments: Hold
Company / Option: Pfizer Jan. 2010 $25 calls
Option Symbol: WPE AE
Current Price: $1.95
Comments: Hold
Company / Option: Bank of America Jan. 2010 $55 calls
Option Symbol: WBA AK
Current Price: $2.35
Comments: Hold
Company / Option: Fifth Third Bancorp Jan. 2010 $30 calls
Option Symbol: YJF AF
Current Price: $2.75
Comments: Hold
Company / Option: Viropharma Jan. 09 $12.50 calls
Option Symbol: ZCG AV
Current Price: $1.70
Comments: Hold
Company / Option: American Eagle Outfitters Jan. 2009 $30 calls
Option Symbol: VXX AF
Current Price: $1.40
Comments: Hold
Company / Option: Sun Microsystems Jan. 2009 $5 calls
Option Symbol: XOG AA
Current Price: $0.43
Comments: Hold
Company / Option: Mylan Labs Jan. 2010 $20 calls
Option Symbol: WYQ AD
Current Price: $1.45
Comments: Hold
Company / Option: Cirrus Logic Jan. 2009 $10 calls
Option Symbol: VUR AB
Current Price: $0.15
Comments: Hold
Company / Option: Coeur D’Alene Jan. 2009 $2.50
Option Symbol: ZYB AZ
Current Price: $2.70
Comments: Hold
Company / Option: Powershares QQQ Trust – bull spread
Jan. 2009 $43 put(bought)
Jan. 2009 $39 put(sold)
Option Symbol: OZC MQ
Option Symbol: OZC MM
Current Price: $3.68
Current Price: $2.20
Comments: Hold
Company / Option: Microsoft – bull spread
Jan. 2009 $32.50 call(bought)
Jan. 2009 $40 call (sold)
Option Symbol: VMF AZ
Option Symbol: VMF AH
Current Price: $1.65
Current Price: $0.31
Comments: Hold
Company / Option: Tenet Healthcare – bull spread
Jan. 2010 $5 call (bought)
Jan. 2009 $7.50 call (sold)
Option Symbol: YTX AA
Option Symbol: ONZ AU
Current Price: $1.70
Current Price: $0.40
Comments: Hold