This blog is a bit delayed as I double checked my Mega Millions numbers before getting to work on it. A winning ticket would have altered my priorities a bit this weekend. Since I was not spending my weekend shopping for a 2012 ROUSH Stage 3 Mustang here goes on the blog –
The Striking Price column focuses in on one of the volatility related Exchange Traded Notes – TVIX – that has been in the news lately. For those involved in trading ETN’s that have a strategy or are leveraged in nature this may be a good read.
Options Action –
The guys started out discussing the stellar quarter that closed on Friday. I’m sure by now you have probably heard by now this is the best first quarter since 1998. As I am all about market statistics and seasonality watch for a follow up on what happens to the market in the 9 months following a stellar first quarter in this space early this week.
The first stock discussion was on The TJX Companies, better known as the operator of TJ Maxx stores (TJX – 39.71). The feeling is the stock may be overvalued and a drop in shares is on the horizon. The trade recommendation is to buy the TXJ July 37.50 Puts for 1.00 which is as straightforward on a bearish recommendation you can get.
The next trade involves Research in Motion (RIMM – 14.70) which was the bearer of bad earnings news last week. The feeling here is that the company is going to start exploring strategic alternatives and the outcome may be a buyout. Although sales are not going so well, the company does have a substantially valuable portfolio of patents. With this bullish outlook the trade recommendation is a call spread buying a RIMM Jan 2013 20.00 Call for 1.05 and selling a RIMM Jan 2013 27.50 Call for 0.30. The net cost for this trade is 0.75 with a potential profit for the spread of 6.75. Note the time frame involves several months for a potential deal to develop.
As for me with no lottery numbers hitting, I’ll keep dreaming of the car below –