Technical Trader – Cummins Inc
Jul 21, 2010 Options, Stocks, Technical Analysis
Cummins Inc (CMI) is up $1.51 to $74.05, currently one of the strongest performers among S&P 500 stocks. However, the stock will form a double top if continues to advance and hits its next resistance area of $75. Traders might want to look at shorting the stock above $74.50 or selling call the September 85 calls, which are asking $1.20.
Tags: cummins inc, options writing, sell calls, Technical Analysis
Generate Options Income Selling Calls
Feb 19, 2010 Options
On February 11, we recommended that subscribers to our Navivest Options Writer service, sell calls on solar panel maker First Solar (FSLR). Our rational was that we expected the stock to drop, as European countries such as Germany and Spain, were going to be cutting the subsidies they currently provide to their citizens for installing solar power.
The generous subsidies offered by Germany has made that country the leader among all countries in solar usage. With the planned cuts in subsidy, demand will be lowered and solar pricing, which has taken a hit over the past couple years, will continue to deteriorate. This obviously will impact First Solar’s profits.
When we sent out the recommendation, First Solar was trading at $114. 45. We sold the March 150 calls on the premise that it would be very unlikely the stock would climb that high by March 19, 2010, when the March options expired.The stock actually rallied a bit this week, but today, the stock is down on disappointing earnings news released yesterday and two downgrades, bolstering our contention that the stock will not hit $150 before the March expiration. If the stock holds below 150 and thus is not called away on us, our profit on the trade is 100%, in a month!
Writing options should be a part of every options trader’s portfolio. 80% of all options expire worthless, meaning that for those writing options, they have the opportunity to be right 80% of the time, making a very strong case for why traders should make selling calls a part of their repertoire. With the right stock picking strategy underlying their call writing/options selling strategy, option traders can consistently generate options profit every month.
For more information on our service, visit our website at http://www.navivest.com/services.htm.
Tags: calls, first solar, Options, options writing, selling calls
