Seasons Greetings !!!

Wish you a very happy Christmas and best of holidays.

I would be slow in posting over holidays. Blog is also on vacation :)

Selling Covered calls on Apple Computer (AAPL)

I acquired shares of Apple Computer (AAPL) as a result of put option contracts getting assigned. My cost of these shares was $88.83 per share.

While I do maintain a positive view of Apple Computer's share performance over long term. I am not convinced that come January it would be $100 or even beyond. Just about all the expectation and rumors are baked in the price. Many of the bloggers believe that Apple Computer will cross $100 by MWSF in January.

The prudent move would be to make money from the Apple stocks that I already own. So I am writing covered calls with $100 strike price and January 2007 expiration date.

If my call options are assigned then so be it. I would have made a good profit on these shares. If these call options are not assigned I will still own the shares in a company that I believe has good long term potential.

Opening Another Trade in Apple Computer (AAPL)

Apple Computer has taken a beating in last few days. All due to rumors in my opinion. Well, this creates a buying opportunity.

Although I own 200 shares of Apple Computer (AAPL) decided to open another trade. This time selling put option contracts with Feb 2007 expiration date.

I am debating whether or not I should sell some call options on AAPL shares that I already own. Will decide soon.

Is Google Taking Over My Posts???

Today a reader of this blog send me an interesting web clip. Parts of my posts show up with a link to Google finance. This graph explains it better.

For Apple Computer (AAPL) I wrote this article on Dec 15. Here is what shows up at Google if you search for AAPL. Look at the link url. Its not pointing to this blog.




On exploring it further. I searched for JOYG. The post that I wrote earlier is here. The Google search shows it as



So the text comes from my posts and the link points to Google site.

Very very confused!!!

Any one with any explanation???

Closing Second Trade in NVIDIA Corporation (NVDA)

I am in a somewhat of a good position today. NASDAQ is down more than 24 points as well as DJIA and S&P 500. However, couple of my stocks are going in opposite direction. positive I mean.

Earlier in the day I closed Joy Global (JOYG). Just now I bought back the put options that I sold roughly 2 weeks ago in NVIDIA Corporation (NVDA). The net profit for this trade is $231 or 2.2%

The purchase price of these put options is $0.65 so one can debate their is still enough money left to let it ride for a while. I agree. However, given that rest of the market is struggling I wanted to be more in cash. After all, my retirement account does not have margin trading capability.

If the market dips in coming days it could give me a nice entry point for couple of stocks in my list.

Great Earnings Report Joy Global (JOYG) - Closing Trade

What a surprise. Joy Global (JOYG) came out with a $0.71 per share earnings and the shares jump over 10%.

Needless to say that I am excited. I had opened a trade in Joy Global by selling five put contracts. just closed them by buying back at $0.15 per share. The net profit from this trade is $721 or 3.6% in little over 2 weeks.

Have not decided what to do next with JOYG. May be I need to take a breather on this stock .

Apple Computer (AAPL) Stock price and iPods sold

There seems to be remarkable correlation between Apple Computers stock price and number of iPods sold. I expected some but not this much correlation. It is an interesting analysis none the less.

Apple Computer (AAPL) Put Options Assigned

It had to happen. After closing 13 successful trades in a row (Last one in Continental Airlines - CAL) I had a decision point - should I let the put options in Apple Computer (AAPL) be assigned or buy them back with near zero return.

What a dilemma!

I opened this trade in Apple Computer roughly 10 days ago by selling put options with Dec 2006 expiration date. The strike price was $90. Given that this is a retirement account I used cash secured puts. So had to put down $18,000 for 2 put options.

My first choices was to buy back put options and at certain times during last week I would have made a small profit. For all practical purposes this would have been a zero return on investment or a small loss.

The second choice was to let these put options be assigned. My cost per share is $88.83. Given that AAPL closed at $87.72 the paper loss is $1.11 per share.

I took second choice and let the puts be assigned. I am very very positive on Apple Computer and would rather take a paper loss. Also it opens up more investment options. More on it shortly in another post.

UAL Corp. (UAUA) and Continnental Airlines (CAL) in Preliminary Merger Talks

Reuters reports that UAL Corp (UAUA) and Continental Airlines (CAL) are in preliminary talks to merge and create world largest airline.

NEW YORK/PHILADELPHIA (Reuters) - United Airlines' parent UAL Corp. (NASDAQ:UAUA - News) and Continental Airlines Inc. (NYSE:CAL - News) are in preliminary talks about a merger that would create the largest airline in the world, sources familiar with the situation said on Wednesday.

Awesome!!! This airline sector needs some consolidation. Customer service has gone to never never land. Hopefully, with UAL and Continental merger we could see some improvements in this area.

For me the excitement comes from two fronts. First, merging of two frequent flier accounts. Read easy to get to a premier status with all its benefits. Second, I have sold put options on Continental Airlines (CAL) in this retirement account.

Opening New Trade in Continental Airlines, Inc (CAL)

This morning Continental Airlines (CAL) dropped over 3%. Perfect, thank goodness to all the rumors. I have freed up cash from yesterday's closing of trade in Continental Airlines. So why not reinvest.

Just opened a new trade by selling put options in CAL with Jan 2007 expiration date.

Closing Trade in Continental Airlines Inc. (CAL)

What a luck! Continental Airlines (CAL) share price shot up over 8% today over merger and acquisition rumors. Just about all the major news sources reported that potentially United Airlines could acquire Continental Airlines or two can merge.

A second accolade to Continental Airlines comes from being selected the best airline in North America in Business Traveler magazine's 2006 Readers' Choice Best in Business Travel Survey. Continental also received awards in 2 more categories.

I could not be happier. I had sold 5 put option contracts last month on CAL. Although, these options were to expire this Friday it no longer made sense to hold on to them. Price was too low -- $0.15 per share.

The return on this investment is $474 or 2.37% in 25 days.

This is also my 13th trade in a row that I have been able to close in the money since start of this retirement investment account.

$310,000 Nokia Corporation (NOK) Phone

You must be kidding. Unfortunately, it's true. Bloomberg reports that

The precious object is a cell phone from Nokia Oyj's Vertu luxury division, whose offerings start at $4,350 for stainless- steel versions and soar to $310,000 for bejeweled ones. They include a button that connects the caller to a round-the-clock, multilingual concierge service, which costs an additional $2,000 annually after a free first year

Need less to say that the celebrities such as Beckham and Beyonce have these. To me this is borderline insanity. Oh well.

I am happy to own Nokia call LEAPS in my portfolio. Hope that Nokia sells a whole lot of these Vertu phones :)

AMD and NVIDIA Corporation (NVDA) in Trouble with Justice Department?

Engadget has an article on how AMD and NVIDIA are in trouble with justice department and have been served a subpoena. Apparently, price fixing.

Damn!!! I am invested in NVIDIA Corporation (NVDA).

On one hand I can not and should not panic. But at the same time I should take precautionary steps just in case this matter goes deeper and stock price takes a hit.

This is also a lesson that I need to do more research before I invest in a company. Apparently this is a week old news and I missed it.

Lesson learned.

Buy and Hold or Trade for Short Term

This question has been raised by many of the readers. Why do I not buy and hold the shares in the company I like. The reasons cited are

• Proven strategy - think Warren Buffet
• Lower trading costs or brokerage fees
• Dividends

I totally agree with all the reasons mentioned above. But that is only one side of the equation. The other side, I believe, is that one has to be able to

• Pick great companies
• Ability to ride the up and down price wave
• Very long term perspective - not affected by short term price swings financially

For me, the long term perspective and ability to ride the wave is not a problem. Especially in the retirement account such as this one. The problem is the ability to pick great companies to invest in. If past is an indicator actually my picks are really lousy in long run. Holding on to these companies is nothing but a disaster. Instead on buying low and selling high I was buying high and selling low.

So, I had to devise a strategy that works with my limitations. In this post I went in more details of various ways I could invest into companies. In my experience a short term trading strategy makes lot more sense.

If I do become convinced that a company is a good long term holding prospect then absolutely I am more than willing to buy and hold either LEAPS or the stocks outright. In fact I did buy LEAPS on Nokia Corporation (NOK) last month.

Another reason is flexibility and versatility of using Stock Options compared to stocks. Options offer me many more choices that can be used in a down market while owning stocks works only in rising market conditions. More on this topic in another post.

I would love to hear your trading strategies.

Round Five Trading in MEMC Electronic Materials (WFR)

MEMC Electronic Materials (WFR) is turning out to be a good company to trade. So far I have been able to successfully close 4 trades in WFR. Hoping for a reapeat.

The company is a bit over-valued in my opinion given the recent run up. However, the macro conditions are in its favor given the emphasis on solar energy. In any event it is a good company to own in long run.

Selling three (3) put option contracts with jan 2007 expiration date.

Apple Computer (AAPL) Share Price And Cupertino Temperature

Given that I am invested in Apple Computer (AAPL) wanted to keep up with the news. While surfing the web came across this graph that I could not resist sharing with the readers. Not sure if I can draw much conclusion from this graph. Not ready, just yet, to base my investment decisions on temperature in Cupertino :) However, this web site is a fantastic idea and fun to use.

Clsoing Trade in EnCana Corporation (NYSE:ECA)

Found myself in a rather precarious situation today. My cash balance dropped to less than $300. Not a very smart situation given that I am planning to be 30-40% in cash as per my asset allocation model for retirement.

The saving grace was my earlier investment in EnCana Corporation (NYSE: ECA). The put options I sold were significantly in the money. ECA has climbed from $51 to $53.8 during this time - last 15 days. Need less to say that in this case it would have been better to own the shares. Oh well, you can't win them all.

The net gain for this trade is $521 or 2.08%. On annualized basis the return on investment would be 51%.

This is also 12th trade in a row that I have been able to close successfully.

Investing in E*Trade Financial Corporation (ET)

Although I did not select E*Trade Financials as my broker for this blog they are a great company. During my research on finding a broker for the retirement account I found them to be very competitive. Some of my friends that use E*Trade Financials (ET) are very happy with the service. However, I personally like Fidelity. To me they are just a tad bit better in customer service and that made all the difference.

So that being said. I wanted to invest in E*Trade but so far it was on a lower priority. Given that it was moving sideways I thought I could wait. Now seems to be a good time. Overall E*Trade seems to have lot going for it. However, one concern is the free trade phenomena started with Zecco. However, given E*Trade's diversified business line it should be able to adopt well. Other statistics such as PE ratio, growth rate are well within my expectation.

I also believe that with housing market down regular investors should be back in the financial markets. This bodes well for E*Trade as well.

I am selling put option contracts in E*Trade Financial with Jan 2007 expiration.

Closing Remaining Trades in MEMC Elctronic Materials, Inc. (WFR)

I opened this trade on Nov 16th by selling put options in MEMC Electronic Materials, Inc. (WFR) with expiration date of Jan 2007. WFR shares price has improved significantly since then. It no longer makes sense to hold on to these put options.

I could capture roughly 69% of the maximum possible trade value in 19 days. Good enough. I think it would possible to reinvest this cash in a better trade. I have added few more stocks to my potential trading list that look fairly good now. Also I am worried that WFR may take a price hit here. No technical analysis just a gut feel watching the price movement of this stock.

Net gain from this trade is $306 or 2.91% in 19 days.

Round Two Investing in NVIDIA Corporation (NVDA)

I successfully closed a trade in NVIDIA Corporation (NVDA) yesterday. This trade was closed as the risk reward equation was no longer in my favor for this particular trade in NVDA.

I still like this company. To me it is undervalued. The new graphic cards are amazing. My gamer friends swear by them.

So why not, decided to open another trade in NVDA. This time selling put options with Jan 2007 expiration date.

Closing Trade in NVIDIA Corporation (NVDA)

First small milestones for this blog. It is the 10th trade I closed. This is also the 10th winning trade in a row.

It has been an interesting trade. When I sold put options in NVIDIA Corporation (NVDA) it was trading for $36 per share on Nov 13. Today when I closed this trade it was trading at $36.68 per share. Essentially a gain of $0.68 per share over 21 days. The percent gain is approx 1.9% over 21 days if I invested in stocks.

However, in this option trade for an investment of $35 per share I was able to generate $0.95 per share. the trading fees were higher for options than trading in stocks. The difference in brokerage fee, however, is not substantial enough to make a difference.

All in all for this trade it was more profitable to invest in options than in stocks. This is something I will analyze going forward. Could lead to some interesting insights.

Overall, I had a gain of $261 (including all brokerage fees) over 21 days. The return on investment is approx 2.48% for the duration of trade (or 43% if annualized).

Third Round Trading in Apple Computer, Inc. (AAPL)

It seems that Apple Computer, Inc. has become one of my favorite companies to trade. So far I have successfully managed to close 2 good trades (here and here). The plan is to repeat AAPL trade yet another time.

My confidence in Apple Computer shot up this weekend when I saw Parallels virtual machine working on a Mac. Simply impressive. I think with Parallels Mac is one of the better windows PC out there.

So, inspite of Apple Computer's share price above $90 I am selling more put option contracts in AAPL with Dec 2006 expiration date.

Investment Analysis 3.5% Return - November 2006

Well this is really more than just November as I started investing in October. However, by the time all the cash was in this blogging account it was Oct 23rd. Also in October I only made 2 investments - here and here. The second trade took place on Oct 27th. I closed no trades in October 2006.

3.5% The bottom line. November was a fantastic month. The net gain is $3,523.08. That is approximately 42% annualized. This beats my first year goal of 20% or little over 1.6% for the month. May be a beginners luck!!!

Some interesting stats:

• Opened 12 trades
• Closed 9 trades
• All trades were winning trades
• Average cash generated per trade is $253.22 rest in paper gains and interest earned

I spend on an average 30 min per day on investment activities. Definitely, way more time on updating this blog.

Many of my readers said that I should be able to generate 10-15% per month. May be I can but that day is long away. For the time being I am happy to take 3.5% return for the month.

Re-entering Trade In Joy Global (JOYG)

Given that JOY Global has dropped to $43 (and lower) today I finally decided to open a new trade in JOYG. I am still positive on this company and I think short term market volatility provides an opportunity. The risk reward ratio is once again I am comfortable with.

So sold 5 more put option contracts with Jan 2007 expiration date.