I think FAST is a terrific "earning season and option trading"
case study. I sold calls on my long held position with two things
in mind: 1) make extra "dividends" and 2) 80% of calls expire
worthless. I also need to take the profits so if I got called
away, I good with it the action.
Well, got called away today on 300 shares of my 400 on FAST a week
before expiration - I AM THE 20%, I AM THE 20%!!!
Earning report yesterday caused a 10% spike in price and it is
trailing down as reality sets in on the traders. I expect the
stock to continue to erode to the end of the year and apparently
have at least one person who agreed.
Made money... happy.
Malcolm
Dan Hess on
Malcolm
Glad to hear you are happy with the result on FAST.
I interpreted the FAST earnings report yesterday a bit
differently. Sales continued to rise at about 12% as they have
for most of this year and EPS slightly faster. Thus good company
growth in the slow growth US economy indicating they are taking
market share from someone. I think FAST is recognized to be a well
managed company in a tough industry that is cyclical and the key
question is what PE multiple or price is this company a buy or
sell?
I do agree that with 2012 EPS expected to be $1.44 and 2013 1.67,
an increase of 15.9%, this indicates a current PE of 31.2 and a
future PE of 26.9 both quite high levels for a growth stock in a
cyclical industry.
indicated a technical breakout from a quadruple top suggesting an
upside move to $58. Based upon fundamentals I have FAST as a sell
at 58.12 and thus I tend to see some upside move more likely
through year end as opposed to a decline.
It will be interesting to see what happens.
Dan
On 10/12/2012 12:01 PM, Malcolm Myles wrote:
Paul,
I think FAST is a terrific "earning season and option trading"
case study. I sold calls on my long held position with two
things in mind: 1) make extra "dividends" and 2) 80% of calls
expire worthless. I also need to take the profits so if I got
called away, I good with it the action.
Well, got called away today on 300 shares of my 400 on FAST a
week before expiration - I AM THE 20%, I AM THE 20%!!!
Earning report yesterday caused a 10% spike in price and it is
trailing down as reality sets in on the traders. I expect the
stock to continue to erode to the end of the year and apparently
have at least one person who agreed.
Made money... happy.
Malcolm
Jim Thomas on
Very interesting. My understanding is that
it's highly unusual (and in theory, never optimal) for a call holder to
exercise early except possibly on the day before an ex-dividend
date.
I think FAST is a terrific
"earning season and option trading" case study. I sold calls on my long held
position with two things in mind: 1) make extra "dividends" and 2) 80% of
calls expire worthless. I also need to take the profits so if I got
called away, I good with it the action.
Well, got called away today on
300 shares of my 400 on FAST a week before expiration - I AM THE 20%, I
AM THE 20%!!!
Earning report yesterday caused a 10% spike in price and
it is trailing down as reality sets in on the traders. I expect the
stock to continue to erode to the end of the year and apparently have at least
one person who agreed.
Made money...
happy.
Malcolm
Malcolm Myles on
I better do this right.
To recap with detail previously not provided...
I have 600 shares of FAST with a cost basis of $8.24 - I've had
the shares for some time. I have a large write off coming and
wanted to sell the shares so that I could use the loss to offset
any gains. Any remainder would be taxed at this years rate, which
I find advantageous to do because of the discord in DC.
I have always thought about Covered Options as a technique I
should learn and use, so I asked my broker, set up my account and
then proceeded to write a covered call. I knew only what I had
picked up in an investment club and my discussion with my broker.
My first trade Aug 20th:
STO 6x 11/17/12 44.00 C @ 2.23, net $1,324.47
If exercised, I would be collecting: share price + premium -
costs = $27,724 and change. If I sold outright at the time, I
would have gotten $26,000 ball park.
It was a "seeing eye single" - if found money without my knowing
how. I then started with the COOL Tools and subsequently learned
that it was a "seeing eye double or triple". APR was 58% at
$1,324.
Time passed and I learned... boy howdy. I made two errors: 1) I
wrote out the call too far out, and 2) I wrote the call past an
earnings date (10/11/2012). Both party fouls.
However, I also learned I could buy the option back which I did
when the price dropped.
Second trade Sep 13th:
BTC 6x 11/17/12 44.00 C @ 1.25, at $762, netting an APR of 27%
and $562 for the completed trade.
My third mistake. I should have waited until the price got lower,
which it did, and use the COOL Tool to analyze a better return.
However, I still had my 600 shares, and now $562 cash in the
account. Learned three valuable lessons, found COOL Tools and got
paid to do it!
I still need to liquidate the position - I'm an investor. The
difference between an investor and a trader is one sell order. I
don't sell well which makes me an investor. This is one reason I
thought covered options may be of benefit to me - I set my price,
the month I want to sell, write the call and walk away.
So I made my fourth mistake, Sep 13th:
STO 6x 10/20/2012 41.00 C at $2.70 for a net of
$1,620.
Why? I am not ashamed to admit, I wanted to see if I would get
taken some where in the 43-44 range as my sell price by COOL Tool
was $43.66 with premiums if I got assigned, and $1,620 is real
nice incentive. I was very comfortable with $43.66 when I wrote
the call thinking the price would bobble around this area for a
while...
So I accomplished my goal: a painless way to sell a long held
stock position. Why was it a mistake? Well, I think it was
because I wrote the call too far away from the earnings release to
get the maximum premium for the price I was comfortable with (41)
AND I wrote the call too close to the earnings release so I didn't
have enough sense to set a price in relationship to the expected
activity prior and shortly after the earnings release (41).
Earnings came out Thursday and the stock rocketed 10% - buy the
rumor, sell the fact right... wrong. Stock hit 46+ and then began
to drift lower.
Today I had 300 shares (half my position) called away at $41.00 a
share. Money in the bank baby and $32.76 per share just because I
stayed alive all this time... sweet with a $810 cash cherry!
As for why I got called away a week before expiration? Jim T, I
think it is because Nouriel Roubini buys calls by the truck load
and saw a quick $4.20+/- profit on an over active stock with a
great account statement. When markets are made and broken on
fractions of a cent in fractions of second, I can't be surprised
when someone stoops down and picks up $4.
My long term outlook for FAST? Love this company. Smart, making
money, great dividend player if not an expensive growth
potential. In five years, I'll still own shares in this company.
I agree with Dan H's assessment (but Dan, it was all that and a
bag of chips last quarter but the price never broke 50?) but with
all the negative energy out there right now, I believe the stock
price will, without merit, trend down as the construction season
moves south for the winter, stimulus evaporates as projects finish
up, Euro, etc, etc, etc... (did you just read the etc with Yule
Brenners voice? I did typing it.)
Now that I have rolled out the profits on my shares and Uncle Sam
is boned because of my offset, I'm going to write cash secured
puts and put on some more shares.
Education while getting paid? Who would have thought it possible
in a dog eat dog economy?!
Disclaimer: I reserve the right to be totally wrong and expect the
universe to clearly, succinctly either prove my work true or
provide me with corrections if my work is false. Either way - did
you see that $810 just for clicking a mouse with minimum level of
intellect? Huzzah!
Disclaimer 2: do you own work! etc, etc, etc...
Malcolm
On 10/12/2012 9:01 AM, Malcolm Myles
wrote:
Paul,
I think FAST is a terrific "earning season and option trading"
case study. I sold calls on my long held position with two
things in mind: 1) make extra "dividends" and 2) 80% of calls
expire worthless. I also need to take the profits so if I got
called away, I good with it the action.
Well, got called away today on 300 shares of my 400 on FAST a
week before expiration - I AM THE 20%, I AM THE 20%!!!
Earning report yesterday caused a 10% spike in price and it is
trailing down as reality sets in on the traders. I expect the
stock to continue to erode to the end of the year and apparently
have at least one person who agreed.
Made money... happy.
Malcolm
Malcolm Myles on
WooHoo... I love giving money more than making
it!
Boxers and Buddies, Wylie Animal Rescue and Northern Nevada
Bulldog Rescue just got an unexpected and apparently much
appreciated donations! Well, lets see if lightening strikes twice.
Malcolm
On 10/12/2012 6:47 PM, Malcolm Myles
wrote:
I better do this right.
To recap with detail previously not provided...
I have 600 shares of FAST with a cost basis of $8.24 - I've had
the shares for some time. I have a large write off coming and
wanted to sell the shares so that I could use the loss to offset
any gains. Any remainder would be taxed at this years rate,
which I find advantageous to do because of the discord in DC.
I have always thought about Covered Options as a technique I
should learn and use, so I asked my broker, set up my account
and then proceeded to write a covered call. I knew only what I
had picked up in an investment club and my discussion with my
broker.
My first trade Aug 20th:
STO 6x 11/17/12 44.00 C @ 2.23, net $1,324.47
If exercised, I would be collecting: share price + premium
- costs = $27,724 and change. If I sold outright at the time, I
would have gotten $26,000 ball park.
It was a "seeing eye single" - if found money without my knowing
how. I then started with the COOL Tools and subsequently
learned that it was a "seeing eye double or triple". APR was
58% at $1,324.
Time passed and I learned... boy howdy. I made two errors: 1)
I wrote out the call too far out, and 2) I wrote the call past
an earnings date (10/11/2012). Both party fouls.
However, I also learned I could buy the option back which I did
when the price dropped.
Second trade Sep 13th:
BTC 6x 11/17/12 44.00 C @ 1.25, at $762, netting an APR of
27% and $562 for the completed trade.
My third mistake. I should have waited until the price got
lower, which it did, and use the COOL Tool to analyze a better
return. However, I still had my 600 shares, and now $562 cash
in the account. Learned three valuable lessons, found COOL Tools
and got paid to do it!
I still need to liquidate the position - I'm an investor. The
difference between an investor and a trader is one sell order.
I don't sell well which makes me an investor. This is one
reason I thought covered options may be of benefit to me - I set
my price, the month I want to sell, write the call and walk
away.
So I made my fourth mistake, Sep 13th:
STO 6x 10/20/2012 41.00 C at $2.70 for a net of
$1,620.
Why? I am not ashamed to admit, I wanted to see if I would get
taken some where in the 43-44 range as my sell price by COOL
Tool was $43.66 with premiums if I got assigned, and $1,620 is
real nice incentive. I was very comfortable with $43.66 when I
wrote the call thinking the price would bobble around this area
for a while...
So I accomplished my goal: a painless way to sell a long held
stock position. Why was it a mistake? Well, I think it was
because I wrote the call too far away from the earnings release
to get the maximum premium for the price I was comfortable with
(41) AND I wrote the call too close to the earnings release so I
didn't have enough sense to set a price in relationship to the
expected activity prior and shortly after the earnings release
(41). Earnings came out Thursday and the stock rocketed 10% -
buy the rumor, sell the fact right... wrong. Stock hit 46+ and
then began to drift lower.
Today I had 300 shares (half my position) called away at $41.00
a share. Money in the bank baby and $32.76 per share just
because I stayed alive all this time... sweet with a $810 cash
cherry!
As for why I got called away a week before expiration? Jim T, I
think it is because Nouriel Roubini buys calls by the truck load
and saw a quick $4.20+/- profit on an over active stock with a
great account statement. When markets are made and broken on
fractions of a cent in fractions of second, I can't be surprised
when someone stoops down and picks up $4.
My long term outlook for FAST? Love this company. Smart,
making money, great dividend player if not an expensive growth
potential. In five years, I'll still own shares in this
company. I agree with Dan H's assessment (but Dan, it was all
that and a bag of chips last quarter but the price never broke
50?) but with all the negative energy out there right now, I
believe the stock price will, without merit, trend down as the
construction season moves south for the winter, stimulus
evaporates as projects finish up, Euro, etc, etc, etc... (did
you just read the etc with Yule Brenners voice? I did typing
it.)
Now that I have rolled out the profits on my shares and Uncle
Sam is boned because of my offset, I'm going to write cash
secured puts and put on some more shares.
Education while getting paid? Who would have thought it
possible in a dog eat dog economy?!
Disclaimer: I reserve the right to be totally wrong and expect
the universe to clearly, succinctly either prove my work true or
provide me with corrections if my work is false. Either way -
did you see that $810 just for clicking a mouse with minimum
level of intellect? Huzzah!
Disclaimer 2: do you own work! etc, etc, etc...
Malcolm
On 10/12/2012 9:01 AM, Malcolm Myles
wrote:
Paul,
I think FAST is a terrific "earning season and option trading"
case study. I sold calls on my long held position with two
things in mind: 1) make extra "dividends" and 2) 80% of calls
expire worthless. I also need to take the profits so if I got
called away, I good with it the action.
Well, got called away today on 300 shares of my 400 on FAST a
week before expiration - I AM THE 20%, I AM THE 20%!!!
Earning report yesterday caused a 10% spike in price and it is
trailing down as reality sets in on the traders. I expect the
stock to continue to erode to the end of the year and
apparently have at least one person who agreed.
Made money... happy.
Malcolm
Theresa H on
Malcolm,
Thanks so very much for sharing your experiences with FAST. I appreciate getting to understand the entire thought process behind trades. It's a great learning tool for all of us!
Theresa
On Oct 12, 2012, at 9:47 PM, Malcolm Myles wrote:
I better do this right.
To recap with detail previously not provided...
I have 600 shares of FAST with a cost basis of $8.24 - I've had
the shares for some time. I have a large write off coming and
wanted to sell the shares so that I could use the loss to offset
any gains. Any remainder would be taxed at this years rate, which
I find advantageous to do because of the discord in DC.
I have always thought about Covered Options as a technique I
should learn and use, so I asked my broker, set up my account and
then proceeded to write a covered call. I knew only what I had
picked up in an investment club and my discussion with my broker.
My first trade Aug 20th:
STO 6x 11/17/12 44.00 C @ 2.23, net $1,324.47
If exercised, I would be collecting: share price + premium -
costs = $27,724 and change. If I sold outright at the time, I
would have gotten $26,000 ball park.
It was a "seeing eye single" - if found money without my knowing
how. I then started with the COOL Tools and subsequently learned
that it was a "seeing eye double or triple". APR was 58% at
$1,324.
Time passed and I learned... boy howdy. I made two errors: 1) I
wrote out the call too far out, and 2) I wrote the call past an
earnings date (10/11/2012). Both party fouls.
However, I also learned I could buy the option back which I did
when the price dropped.
Second trade Sep 13th:
BTC 6x 11/17/12 44.00 C @ 1.25, at $762, netting an APR of 27%
and $562 for the completed trade.
My third mistake. I should have waited until the price got lower,
which it did, and use the COOL Tool to analyze a better return.
However, I still had my 600 shares, and now $562 cash in the
account. Learned three valuable lessons, found COOL Tools and got
paid to do it!
I still need to liquidate the position - I'm an investor. The
difference between an investor and a trader is one sell order. I
don't sell well which makes me an investor. This is one reason I
thought covered options may be of benefit to me - I set my price,
the month I want to sell, write the call and walk away.
So I made my fourth mistake, Sep 13th:
STO 6x 10/20/2012 41.00 C at $2.70 for a net of
$1,620.
Why? I am not ashamed to admit, I wanted to see if I would get
taken some where in the 43-44 range as my sell price by COOL Tool
was $43.66 with premiums if I got assigned, and $1,620 is real
nice incentive. I was very comfortable with $43.66 when I wrote
the call thinking the price would bobble around this area for a
while...
So I accomplished my goal: a painless way to sell a long held
stock position. Why was it a mistake? Well, I think it was
because I wrote the call too far away from the earnings release to
get the maximum premium for the price I was comfortable with (41)
AND I wrote the call too close to the earnings release so I didn't
have enough sense to set a price in relationship to the expected
activity prior and shortly after the earnings release (41).
Earnings came out Thursday and the stock rocketed 10% - buy the
rumor, sell the fact right... wrong. Stock hit 46+ and then began
to drift lower.
Today I had 300 shares (half my position) called away at $41.00 a
share. Money in the bank baby and $32.76 per share just because I
stayed alive all this time... sweet with a $810 cash cherry!
As for why I got called away a week before expiration? Jim T, I
think it is because Nouriel Roubini buys calls by the truck load
and saw a quick $4.20+/- profit on an over active stock with a
great account statement. When markets are made and broken on
fractions of a cent in fractions of second, I can't be surprised
when someone stoops down and picks up $4.
My long term outlook for FAST? Love this company. Smart, making
money, great dividend player if not an expensive growth
potential. In five years, I'll still own shares in this company.
I agree with Dan H's assessment (but Dan, it was all that and a
bag of chips last quarter but the price never broke 50?) but with
all the negative energy out there right now, I believe the stock
price will, without merit, trend down as the construction season
moves south for the winter, stimulus evaporates as projects finish
up, Euro, etc, etc, etc... (did you just read the etc with Yule
Brenners voice? I did typing it.)
Now that I have rolled out the profits on my shares and Uncle Sam
is boned because of my offset, I'm going to write cash secured
puts and put on some more shares.
Education while getting paid? Who would have thought it possible
in a dog eat dog economy?!
Disclaimer: I reserve the right to be totally wrong and expect the
universe to clearly, succinctly either prove my work true or
provide me with corrections if my work is false. Either way - did
you see that $810 just for clicking a mouse with minimum level of
intellect? Huzzah!
Disclaimer 2: do you own work! etc, etc, etc...
Malcolm
On 10/12/2012 9:01 AM, Malcolm Myles
wrote:
Paul,
I think FAST is a terrific "earning season and option trading"
case study. I sold calls on my long held position with two
things in mind: 1) make extra "dividends" and 2) 80% of calls
expire worthless. I also need to take the profits so if I got
called away, I good with it the action.
Well, got called away today on 300 shares of my 400 on FAST a
week before expiration - I AM THE 20%, I AM THE 20%!!!
Earning report yesterday caused a 10% spike in price and it is
trailing down as reality sets in on the traders. I expect the
stock to continue to erode to the end of the year and apparently
have at least one person who agreed.