Thursday, November 30, 2006

Momma said there'll be days like this

When the market finally closed and the last blinking numbers came across the ticker I wonder if the Nollenberger Capital guy thought he might have trouble hitting water if he were to fall out of a boat? This Nollenberger Capital guy initiated coverage on the shoe guys (CROX) today with a BUY rating to start. Does the market give this guy any love? Nope. CROX closes in the RED. Although in fairness it was down only .69% and on volume less than their 3 month average. But still, it was a BUY rating. Momma said there’ll be days like this… I can hear tonight’s dinner conversation already:

Wife: “Hi honey. How was your day?

Nollenberger Guy: “Well, I started coverage on the company that makes those shoes you like so much. Started them with a BUY rating.”

Wife: “That’s great! Those shoes are so comfortable. You know they come with Disney characters now right? Well anyway what did everyone think about your BUY rating?”

Nollenberger Guy: “The market said, “Shut-up!”

That's it for today. Nollenberger guy keep your head up there is alway tomorrow. Until then keep your eye on your EverDay Money

Duck and covered calls

So I have never dabbled in options before now. From what I have read trading options is a gold brick road to riches… if you are right in your trades or guesses. If you aren’t then you can disappear a pile of cash in a blink of both eyes. That being said I have found a more conservative use of them that seems to fit me better.

Can’t even tell you how I first heard about covered calls a few months back. They have been there the whole time just for some reason I haven’t really looked into them until now. From what I have read and understand selling covered calls can get you some money coming in right now. That is never a bad thing the way I see it. The downside is that your upside is limited to the strike price. Which in a nutshell means you pick a winner it takes off galloping past the strike price then you miss all the money above the strike price. This is the part that stresses me some.

I am always looking for an edge and new trading strategies are fun to read about even if later I decide they aren’t for me. But with covered calls (CCs) I thought that it would be worth the effort. I was looking to do one strike price out of the money and one month out. With price increase plus the premium I wanted to find trades that would give me 3%-5% for the month’s time. Sounds good don’t you think?

In August I did September CCs for Best Buy (BBY) and Starbucks (SBUX). Both got called out and the stock price continued to go up. Made money but missed some upside. In September I wrote EBay (EBAY) and Garmin (GRMN) both called out and the stock continued to rise. But still made money and still missed some. In October it was Yahoo (YHOO), Advance Micro Devices (AMD), and Sandisk (SNDK). Yahoo was called away. AMD was not and I sold the stock shortly after because I didn’t think the following options premiums were that great. SNDK didn’t get called. (See Batting Single A for the first chapter of what so far is a less than happy X-mas story.)

I have decided to stay with covered calls for at least awhile longer and try to give the strategy a fair shake to see what I can do with it. I have eased up a bit and don’t have CCs on everything now. Only half of my Crocs (CROX) have contracts on them. (See Ugly Shoes for the start of that story. Which may or may not turn into a best seller?)

More later.

Wednesday, November 29, 2006

X-mas day (trading)

SNDK red 2.32%, CROX green 1.53%. With these one up one down red and green days I don’t know how to feel at the end. This is not the first time they have gone in opposite direction. Red and Green what am I freaking Santa.

Microsoft reported that they now have 9% of market with their ZUNE. (What is this pick a product name by committee?) With their 9% that puts them in the number 2 spot ahead of Sandisk MP3 players. Is that why they continued to fall today? Some on the boards seem to think that is it. Well it was that or simply SNDK is the worst company ever. I would like to think today was more of the first and less of the second. I am glad that my retirement and life style doesn’t ride on the nickels and dimes that I have in this account. Knowing that, it is fun and interesting to watch (all be it painful at times). I am not ready to let it go, at least not yet. Have been looking at the Jan. options already. The plan right now is to sell covered calls again in December to generate a little money coming in. I’ll let your know. And now the GREEN ( yea!)

CROX, my ugly shoe guys bounced a little today. I am not even going to hazard a guess as to why. Some bodies somewhere bought shares and some bodies sold shares and when all was said and done today it was up 1.53%. Good. If they could get back to $45+ and I was called out in Dec. (on half of my position) I would be fine with it. Average price for me is $44.26. I received $1.60 for the calls. If called out in December then .74 + $1.60 = $2.34 divide by $44.26 give me 5.28% return on half of my position for what 25 days. I’ll take that. See I am so much more positive when talking about green stocks. On green Days I almost have that winning stock picker swagger. It is just these freaking X-mas days that my emotions get whipsawed.

That’s it for today, may more of your days than not be Green. And keep you eye on your EveryDay Money

Tuesday, November 28, 2006

Ugly Shoes

I admit it I was seduced by the story (it is a great build your own company, create your own destiny type of story) and the sales growth is something just shy of straight up. Plus I see tons of them on people’s feet.

Crocs (CROX) has had stellar growth since coming public this year. I stayed out even as the stock doubled. When it hit $50 a share I was thinking Holy Cow!! The pull back to the $45’s, I thought, offered a good entry point.
Bought some at $45.50 (11-20-06) I know, the day before insider lockup expired. Not one of my greater decisions. The next day it started dropping and when it hit $42.95 I doubled my position on margin this time no less. I thought of all those on the message boards screaming about one trick ponies, fads, and catching falling knives. Well I was a little gun shy so I sold some covered calls on half of my position (Dec 45’s @ $1.60) Still think that was a good idea.

Yesterday I watched as the market sold off and my SNDK took a real big hit and my ugly shoes drifted lower. Today CROX comes back a little and SNDK drops more. Now the head games start. How far do I let either one of them go? Buy back the options and sell the stock? Admit a mistake? Hang on write some covered calls in Dec. that way I at least have some money coming in? The mind does crazy things when you’re bleeding money. I’ll let you know.

That’s it for today keep your eye on your EveryDay Money

Monday, November 27, 2006

batting single A

Well with SanDisk (SNDK) taking almost a 5% hit today it is hard to think my picking it anything but a mistake. Of course if it had GAINED 5% today, instead, I would be thinking, “… I knew it, never had a doubt.” And there in lies the rub. Today was a little confusing to watch. The CEO had nice things to say about the company this past weekend. Then boom! Red numbers today that trickled lower as the day wore on.
Perhaps I should start back a bit.

I poked at Sandisk (SNDK) at the end of Oct. (10-30-06). Pushed the chips in at $48.20 and knew almost immediately that it was going against me. Looked at the numbers again (P/E, sales, cash flow, the usual suspects) and still thought the company worth my dollars. Instead of selling out I wrote Nov. 50’s covered call options at $1.25 that same day. I then spent the next few weeks watching it drift downward. November expiration came and went and I still had the stock all be it underwater. Not ready to call it a mistake I wrote the Dec. 50’s at $1.35 on 11-20-06. The stock has been treading water in the 47’s most of the time, until today. I wait and watch as the Dec. expiration draws closer. Some days I rationalize the buy and the covered calls were the smart thing and other days (like today) I feel like I stepped on a landmine.

The difference between the “pros” and the others is the ability to take small losses and move on. (Read that somewhere) The way I change my mind on whether this was a good or bad trade and hang on to it in the mean time makes it look like I will be batting single A for awhile longer. Stay tuned I’ll let you know how it all works out. Maybe tomorrow I will tell you about buying Crocs (CROX) on margin and still hanging on to that too.

That’s it for today. Keep your eye on your EveryDay Money

Tuesday, November 07, 2006

Do you ROTH??

ROTH!!! So now it has finally hit me that tax FREE is tax FREE forever. And that boys and girls is a great thing. Funny how as I get older the idea of death and taxes seems.. I don't know what the word is?? REAL.

$4k is what can be thrown into an account this year and everything that it earns is tax FREE when you start to take it out. There are some strings about age and income levels and such… so read up before you put money anywhere.

But really folks if it is inertia keeping you from reading and learning and then investing read up. There are about a million web sites that can point you in the right direction. My only desire today is merely to light that fire. Did you learn something new today? If not then the ROTH IRA basics would be a good trade of your minutes. The new knowledge could be worth thousands down the road.

That's it for today. As always, keep your eyes on your Everyday Money.