|
On Monday we sold our stock in Applied Materials (AMAT) at $12 per share. This is exactly what we paid for it when our put options were excercised forcing us to buy the stock. On net, when option premiums and dividends are included, investors made about 40¢ per share or 3% for about six months of involvement. While I still like Applied Materials long-term, it has earnings coming up and preliminary analysis is questionable. If it approaches its long-term stock price support level near $10/share I will consider a new position in Applied Materials on valuation or if the earnings report is positive we might re-enter. In selling Applied Materials I also considered that we have other investments with similar profiles, such as the Guggenheim Solar ETF and MEMC Electronics. Most Focused Growth, SIMPLE Retirement, Tax-Managed Growth, Growth Trends and Global Total Return accounts added Kodiak Oil and Gas (KOG) stock today as a 3% to 4% position in their asset allocation, paying $9.08. I discussed Kodiak on MarkeWatch.com a couple weeks ago. It is a growing company in oil and gas exploration which has begun a rapid growth path and is also a takeover target. If there is more government stimulus or conflict in the middle east there could be a price spike in the short run. On Friday, we bought back the April $8 puts on Exact Sciences. We had sold the puts for $1.43 and bought them back at 40¢. Figuring out the return goes like this: - We had to hold back $8 per share in our money market in case we had to buy the stock (which we would have been fine doing if it came to that) between the sale of the put option and its expiration, which would occur if the stock (in this case Exact Sciences) had dropped below $8.
- We then divide the gain, in this case $1.03 into the $8 we held in case of purchase (having the stock "put" to us, which equals a little over 12% return on the investment for a little less than a four month holding period (most had originally sold the put near the end of October). That's pretty good for holding money in cash with our only commitment being to potentially have to buy a stock we like at a lower price.
|
Bluemound Asset Management, LLC Disclosures
Bluemound Asset Management, LLC is a Wisconsin Registered Investment Advisor offering various fee-only services for financial planning, investment management, portfolio consulting, stock and option strategy, fixed income investing, pension income planning, 401k design for employers & 401k asset allocation for employees.
Wisquote Insurance Services, LLC is an Independent Insurance Agency and Brokerage offering life insurance, health insurance, long term care insurance, medicare supplements, medicare advantage plans and disability insurance.
All information herein has been prepared solely for informational purposes and the basis for further discussion or consideration. This site does not construe and is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or insurance plan.
We offer no legal or accounting advice.
Kirk Spano, 13500 Watertown Plank, Suite 202, Elm Grove, WI 53122 Telephone: 414-617-6669
Serving throughout Wisconsin, including, but not limited to: Milwaukee, Wauwatosa, Brookfield, West Allis, Madison, Sun Prairie, Watertown, Appleton, Green Bay, De Pere, Oshkosh, Fon Du Lac, Sheboygan, Neenah, Manitiwoc, West Bend, La Crosse, Eau Claire, Superior, Wausau, Stevens Point, Waukesha, Menomonee Falls, Germantown, Mequon, Cedarburg, Grafton, Whitefish Bay, Fox Point, Bayside, Shorewood, Glendale, Elm Grove, Brown Deer, Kenosha, Racine, Mount Pleasant, Caledonia, Bay View, Mukwonago, Burlington, East Troy, Waterford, Lake Geneva, Janesville, Beloit, South Milwaukee, Cudahy, Franklin, Oak Creek, New Berlin, Greenfield, Big Bend, Vernon, Muskego...
Trade Notes 
