Email – #467
We’ve been enjoying a very good year so far, with quite a bunch of winners recently despite the unrelenting chaos in the markets.
Our open positions are in pretty good shape as well, with a possibility of gaining on two of our dormant positions like Mylan and the QQQQs if we have a sustained rally in the coming months. Our other positions, Yamana, Tenet, Motorola, Freeport and Petrobras, are solidly profitable.
I’d like to give you a new pick, but frankly I would rather wait and see what plays out as companies start to release earnings and provide guidance. There are some appealing sectors out there right now and I am trying to work on a natural gas trade with the price of gas at multi-year lows.
That won’t last.
But so far the companies I’m looking at aren’t reflecting the lower prices and could see some downside. Worse, the premiums on these companies are absurdly high, which would force us into a spread trade… something that can be quite tricky.
Earnings season will prove to be another opportunity for volatility to increase. It may just provide us with a few chances at establishing 2011 positions at more favorable prices.
And of course, we could get handed a Citigroup type of trade at any time depending on the whims of the market and the nervousness of sellers. So, sit tight for now and when the opportunity presents itself, we will be ready to jump on it.
The next couple of weeks will hopefully shed some light into how the companies are handling the current times. There is little doubt that the earnings will be horrible this quarter and likely for the rest of the year, but the market will react more to the outlook than the rear view. And if that outlook continues to be cloudy, I can guarantee you that opportunities will abound.
Karim
Current Portfolio:
Company / Option: US Steel Jan. 2011 $120 calls
Option Symbol: OUS AD
Current Price: $0.40
Comments: Hold.
Company / Option: Powershares QQQ Trust Jan. 2010 $40 calls
Option Symbol: WD AN
Current Price: $0.88
Comments: Hold.
Company / Option: Mylan Labs Jan. 2010 $20 calls
Option Symbol: WYQ AD
Current Price: $0.52
Comments: Hold.
Company / Option: Yamana Gold – bull spread
Jan. 2011 $11 call (bought)
Dec. 2011 $12.50 call (sold)
Option Symbol: VPP AB
Option Symbol: VPP AV
Current Price: $3.30
Current Price: $2.45
Comments: Hold
Company / Option: Freeport Copper & Gold – bull spread
Jan. 2011 $30 call (bought)
Jan. 2011 $50 call (sold)
Option Symbol: OBQ AF
Option Symbol: OBQ AJ
Current Price: $17.00
Current Price: $10.00
Comments: Hold
Company / Option: Akamai – bull spread
Jan. 2011 $15 call (bought)
Dec. 2010 $20 call (sold)
Option Symbol: OMU AC
Option Symbol: OMU AD
Current Price: $8.82
Current Price: $5.80
Comments: Hold
Company / Option: Petrobras – bull spread
Jan. 2011 $30 call (bought)
Dec. 2011 $45 call (sold)
Option Symbol: VDW AF
Option Symbol: VDW AI
Current Price: $10.30
Current Price: $5.60
Comments: Hold
Company / Option: Motorola – bull spread
Jan. 2010 $7.50 call (bought)
Dec. 2010 $10.00 call (sold)
Option Symbol: WMA AU
Option Symbol: WMA AB
Current Price: $0.22
Current Price: $0.10
Comments: Hold