Week 7 LiveRocket Turbo Performance - Up 18%
First, some basic housecleaning. Unlike the conservative LiveRocket portfolio weekly reporting, Turbo will get a b-weekly report. The inherent volatility makes me more inclined to longer periods between updates.
Second, buying the puts was the right move. We went on margin $21,925.
Two weeks ago, we were as low as ~$84K. The gross value today is $120,308 or $98,383 after margin.
Here is a review of the stocks and options in the portfolio:
AMX: 250 shares bought @ $34.51 We are down 2.8%
DO: 100 shares @ $86.43. We are down 20%
GRP: 175 shares @ $47.87. We are down 21%
NUAN: 900 shares @ $9.13 We are down 4.7%
STX: 350 shares @ $23.33. We are down 2.3%
TTI: 275 shares @ $30.6. We are down 19.6%
ZOLT 275 shares @ $32.03. We are down 24.8%
ZRAN 305 shares @ $25.56. We are down 24.6%
In this model, I am expecting greater volatility up and down. A 25% shift in value is within the allowable range.
I look forward to the earnings of these companies.
Notes:
1 - an option contract equals 100 shares and the listed prices are per share
2 - Current option price is the bid price (the price you would get, which is lower than the price you would pay)
TIE Calls (Dec 50) 21 contracts @ $4. Almost valueless. Anything is possible with this stock, so I am willing to wait.
TRID Calls (Jan 22.50) 20 contracts @ $4.1 I am no longer of the confirmed belief that TRID is as immune to inventory & pricing pressure. However, I do find it remarkable that the company is as valuable as it was last year, same time, despite a 4X growth in revenue and a 660% growth in earnings. Anything is possible over the next 6 months, and the damage has been done. So I will wait on these as well.
BMHC Puts (Dec $25) 40 contracts @ $2.2. Current value: 4.9. The stock is now ~$21, so we are $4 in the money. With such strongly negative housing news and company earnings releases, it is hard to imagine BMHC bucking the trend. I see a $15~$18 potential range in the next few months. With every dollar drop in stock price, the option value increases 45%.
JNPR Puts (Oct $14) 109 contracts @ $0.55. Current value $1.25. The stock is now $13.63, so we are in the money $0.37. There is possibility of the stock dropping to $12. The company released preliminary earnings and said that they missed expectations by a penny.
CFFN Oct $30 puts 100 contracts @ $0.3. This was a massive mistake and I am looking at how to get out. The mistake I made was not factoring in how thinly traded this stock is. That is, the underlying stock is so darn overvalued because only insiders own and sell. I will try to unwind this or just write off as a loss.
ETH - Nov $30 Puts 50 contracts @ $0.8. Current value is $0.95. Underlying stock price is $34.5. Furniture Brands is a major competitor and their CEO resigned this week, one week before earnings. I think it is a sign of the times among furniture makers. ETH gave guidance 2 weeks ago that they expect to hit target for this quarter, but I think the market is expecting negativity about the future.
WHR -Dec $70 puts 15 contracts @ $3.5. Current value is $3.8. Underlying stock price is $75.8. This one is tricky. The US heatwave will only help sales of WHR air conditioners.
CPWM - Nov $12.50 Puts 50 contracts @ $0.6. Current value is $1. Underlying stock price is $13.46. Target and the slowing housing market is crushing them. Williams-Sonoma (also owner of Pottery Barn, a supposedly more upscale store and therefore immune to these trends), just lowered revenue forecasts. Instead of growing 8%, they are expected to grow 6%.
NVL - Dec $20 Puts 20 contracts @ $1.9. Current value is $1.95. Underlying stock is $19.6. We are $0.40 in the money. this is a slow time for aluminum and I think they will be hurt by energy prices. I am hoping for $2.50 and then out.
RSH - Jan $15 Puts 25 contracts @ 1.15. Current value is $1.45. Underlying stock price is $15.24. The CFO just resigned the week before a new CEO took over. Radioshack is embarking on a massive restructuring - closing 480 stores and so forth. That will help margins over the long term, but the core problem is that Radioshack. In any event, RSH's quarterly earnings were released and instead of the drop from $0.17 per share to $0.12, they fell further to -$0.02. Next quarter's earnings have yet to be revised down. At the same time, the CEO is no longer holding analyst meetings.
As I said last time, it's all about the options. The options we purchased in the last 2 weeks added $11,680 while the BMHC options added another ~$8,000.
Second, buying the puts was the right move. We went on margin $21,925.
Two weeks ago, we were as low as ~$84K. The gross value today is $120,308 or $98,383 after margin.
Here is a review of the stocks and options in the portfolio:
AMX: 250 shares bought @ $34.51 We are down 2.8%
DO: 100 shares @ $86.43. We are down 20%
GRP: 175 shares @ $47.87. We are down 21%
NUAN: 900 shares @ $9.13 We are down 4.7%
STX: 350 shares @ $23.33. We are down 2.3%
TTI: 275 shares @ $30.6. We are down 19.6%
ZOLT 275 shares @ $32.03. We are down 24.8%
ZRAN 305 shares @ $25.56. We are down 24.6%
In this model, I am expecting greater volatility up and down. A 25% shift in value is within the allowable range.
I look forward to the earnings of these companies.
Notes:
1 - an option contract equals 100 shares and the listed prices are per share
2 - Current option price is the bid price (the price you would get, which is lower than the price you would pay)
TIE Calls (Dec 50) 21 contracts @ $4. Almost valueless. Anything is possible with this stock, so I am willing to wait.
TRID Calls (Jan 22.50) 20 contracts @ $4.1 I am no longer of the confirmed belief that TRID is as immune to inventory & pricing pressure. However, I do find it remarkable that the company is as valuable as it was last year, same time, despite a 4X growth in revenue and a 660% growth in earnings. Anything is possible over the next 6 months, and the damage has been done. So I will wait on these as well.
BMHC Puts (Dec $25) 40 contracts @ $2.2. Current value: 4.9. The stock is now ~$21, so we are $4 in the money. With such strongly negative housing news and company earnings releases, it is hard to imagine BMHC bucking the trend. I see a $15~$18 potential range in the next few months. With every dollar drop in stock price, the option value increases 45%.
JNPR Puts (Oct $14) 109 contracts @ $0.55. Current value $1.25. The stock is now $13.63, so we are in the money $0.37. There is possibility of the stock dropping to $12. The company released preliminary earnings and said that they missed expectations by a penny.
CFFN Oct $30 puts 100 contracts @ $0.3. This was a massive mistake and I am looking at how to get out. The mistake I made was not factoring in how thinly traded this stock is. That is, the underlying stock is so darn overvalued because only insiders own and sell. I will try to unwind this or just write off as a loss.
ETH - Nov $30 Puts 50 contracts @ $0.8. Current value is $0.95. Underlying stock price is $34.5. Furniture Brands is a major competitor and their CEO resigned this week, one week before earnings. I think it is a sign of the times among furniture makers. ETH gave guidance 2 weeks ago that they expect to hit target for this quarter, but I think the market is expecting negativity about the future.
WHR -Dec $70 puts 15 contracts @ $3.5. Current value is $3.8. Underlying stock price is $75.8. This one is tricky. The US heatwave will only help sales of WHR air conditioners.
CPWM - Nov $12.50 Puts 50 contracts @ $0.6. Current value is $1. Underlying stock price is $13.46. Target and the slowing housing market is crushing them. Williams-Sonoma (also owner of Pottery Barn, a supposedly more upscale store and therefore immune to these trends), just lowered revenue forecasts. Instead of growing 8%, they are expected to grow 6%.
NVL - Dec $20 Puts 20 contracts @ $1.9. Current value is $1.95. Underlying stock is $19.6. We are $0.40 in the money. this is a slow time for aluminum and I think they will be hurt by energy prices. I am hoping for $2.50 and then out.
RSH - Jan $15 Puts 25 contracts @ 1.15. Current value is $1.45. Underlying stock price is $15.24. The CFO just resigned the week before a new CEO took over. Radioshack is embarking on a massive restructuring - closing 480 stores and so forth. That will help margins over the long term, but the core problem is that Radioshack. In any event, RSH's quarterly earnings were released and instead of the drop from $0.17 per share to $0.12, they fell further to -$0.02. Next quarter's earnings have yet to be revised down. At the same time, the CEO is no longer holding analyst meetings.
As I said last time, it's all about the options. The options we purchased in the last 2 weeks added $11,680 while the BMHC options added another ~$8,000.
posted by Andrew at
4:50 PM
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