In Search of the Perfect Investment

I will admit. I have not written a single covered or uncovered call. But, from my discussions with readers, there’s steady decent money in them — if you manage them. They seem to be ideal for an IRA. Otherwise the accounting for tax purposes becomes a nightmare.

Reader A:

Harry,

Here’s what I try to do.

1- Make 3-5% per month selling covered calls on each position I own regardless if they are called or uncalled.

2- With two weeks remaining before the expiration date of the call option and I still want to own the stock but it has moved up by 20% above the strike price and is going to be called away I buy another position in the same stock and sell a call with a higher strike price. I do this so I keep owning winners and not losers. Example was F.

3- If a position is trending lower and is below the strike price I will immediately buy the cover calls back on a down day if I will meet my 3-5% goal. I then wait for a up day in the stock and immediately sell another option with a strike price that meets my goal. Example is XOM.

4- If a position really tanks and is still trending lower, I will buy back the call and then sell an in the money option leap and immediate put in a buy back order that will give me my month goal of 3-5% to close out the position so I don’t take a loss . Example was STEC.

Reader B:

Something  I have found  better than covered options: selling-naked-puts-to-open on a stock you really like. If you are wrong and it moves against you, you get something put to you that you really like, “on sale”, below the price at which you already liked the stock. Time works on your side as the puts decrease in value over the contract to eventually reach zero at the strike date, whence you buy them back (“close the sale”) at zero. Meanwhile, you not only earn the put premium, but you get interest on the money sitting in an account to cover the potential for the stock that could be put to you during the term of the contracted obligation.

I have earned about 15-30 percent per year on the past 10 years doing this. I do it in a self-directed IRA so that all the tax implications of the short term sales are negated.

Reader C:

Covered calls That works well with stocks that don’t go anywhere and pay dividends.
XOM was a good example. Personally? As I usually pick things carefully and they go up a bunch. A call write limits your profits and you end up kicking yourself way too often.

There are ways of working your way out of bad call write situation (where it rises suddenly, or gaps up)

This is why I much prefer writing puts on stocks I want to own. I won’t get cut off on a great winner.

Be careful. And when you do a call write and your stock jumps up and you are flogging yourself, write to me. I know how to get out of trouble with these unless the gap up is too huge (like with a take over).

Again, it is a very good tool on stocks that don’t move (XOM, MSFT, DIS etc). Don’t write against high beta stocks when they might break out (AAPL or GOOG for example).

Surprise. Surprise. JPMorgan Chase and Citigroup  helped cause the failure of Lehman Brothers Holdings Inc. by demanding more collateral and changing guarantee agreements, according to a court-ordered report on the biggest bankruptcy in U.S. history. For more, today’s Bloomberg. A 2,200 page document lays out in new and startling detail how Lehman Brothers used accounting sleight of hand to conceal the bad investments that led to its undoing. For more, today’s New York Times.

Why Buy and Hold is impossible in tech stocks. It’s been ten years since the Tech Bubble broke. Hence everybody and their uncle are eyeing the past phenomenal ten years. These ten items came from Business Insider:

Venture capital was huge. It never returned to its heights:

+ Back then there were 360 million people on the web. Today there are 1.7 billion.

+ There were 400 million people in the world using mobile phones in 2000. Today it’s 4.6 billion.

+ Webvan went public in 1999 and raised $375 million. Yet even with an extra $1 billion from private investment firms, the company never became profitable. It went bankrupt in 2001, a mere 18 months after its triumphant IPO.

+ In 2000 AOL was valued at $161 billion. Today it’s under $4 billion, and falling.

+ Google’s revenue was $19.1 million. Today it’s over $24 billion, and climbing. (The stock continues to do well for us.)

+ Apple was struggling in 2000. It had just $5 billion in cash. Today it’s close to $40 billion.

+ The iPhone is as powerful as a circa-2000 Mac laptop.

+ Palm was flying high, with its stock at $700 and its PDA owning the market. Now it’s just trying to stay alive.

+ There was no Facebook, no Twitter, no YouTube, no Hulu, no iPhone, no flat screen TVs or monitors, no Toyota Prius,  no satellite radio, no thumb drives, no Kindle, no Nintendo Wii, no compact digital cam corders (like Pure Digital). The first TiVo had just been shipped.

Why didn’t we think of this?  High-end thrill seekers pay to be kidnapped.

Extreme sports such as bungee-jumping from the Macau Tower may well be enough to satisfy the adrenaline needs of the majority of premium thrill-seekers. Those still wishing for more, however, have a new alternative: they can pay to be kidnapped, without warning, by French Ultime Réalité.

“Kidnapping”, “Manhunt” and “Go-Fast Adventure” are all among the standard services Ultime Réalité offers, but it’s open to special requests. Through the company’s simulated kidnapping packages, for instance, the participant is abducted without warning—after leaving a restaurant, say, or in the supermarket parking lot. Paying “victims” are then bound, gagged and imprisoned for four or 10 hours (depending on the scenario they choose), allowing them to experience the terror of the real thing. Additional elements such as ransom, escapes and helicopter chases can also be involved. Manhunt packages, meanwhile, can last either one or two days, with the option to play the role of either hunter or prey. Then there’s the Go-Fast Adventure, where participants take the role of a drug dealer smuggling cargo on the high seas. Finally, a recently added “extreme” package allows clients to wake up on an autopsy table in a morgue, surrounded by corpses and body bags. Pricing on a basic kidnap package is EUR 900.

Just a few weeks into its launch, Ultime Réalité was already getting as many as two requests per day, according to Reutersprimarily from top-level executives seeking an extreme-sports alternative. Don’t look now, but the premium bar just got raised again… (Related: Paparazzi for the rest of us.) Website: www.ultimerealite.fr

Or think of this? Married men and women looking for an affair.

When you pull down the “Please Select” arrow, you get this:

For those who enjoy charts.

The water utility in Edmonton, EPCOR, published the most incredible graph of water consumption last week. By now you’ve probably heard that up to 80% of Canadians were watching the gold medal Olympic hockey game. So I guess it stands to reason that they’d all go pee between periods. But still—the degree to which the water consumption matches with the key breaks in the hockey game is stunning.

Reader Charlie McChesney likes Hotwire. I recommend you look at Hotwire to rent a car or book a hotel. I have used them for the last two or three years, out of 10-15 transactions, only one was a bummer. I got a partial refund on that one-a hotel rated 2-3 stars that was at best a -1 to 0 star joint. Most recently, I rented a midsize National car in Portland, Maine, $62 net for Friday evening through Mon noon (3 days). Use your AMEX card and your own insurance and there are no additional charges. My car (ford Focus) was at least 50-100% more through their website. Only downside is not knowing which rental company you are booking with before paying, however, I don’t think there is an ounce of difference between the majors… Same deal with hotels, all you know is the price and star level and a general idea of the location. but the deals are always 30-50% off the rate on the hotel website, when I check after booking.

Why didn’t we think of this? (continued).
Cocktail  waitress Jamie Jungers took home $75,000 after being named the winner of the Tiger Woods Mistress Beauty Pageant, which took place on the Howard Stern Show. The New York Post reported Jamie Jungers was dressed in a slinky, lingerie-style bikini.

The golf great’s bleached-blonde mistress beat out two other Tiger flames – call girl Loredana Jolie Ferriolo and waitress Jaimee Grubbs – who also appeared on the shock-jock’s satellite radio show to compete for the title by donning skimpy outfits and telling love stories about Woods.

Jungers, 27, convinced Stern to name her the winner by telling how she met Woods while working as a hostess at a Las Vegas casino party in 2005. She said Woods made his first move on her by sending someone to chat her up for him.

She said that although he got married only a couple of months before they met, Woods took her back to a mansion he was staying at in Vegas and they had sex the first night.

When she asked him how his wife was doing, he replied, “good.”

Woods reportedly called her weird nicknames, like “little coffee cup” and “Jamie juices.” She also said that he only broke things off with her after she asked him to give her money. According to Jungers, she was with Woods the night that his dad died in 2006. She claimed that he went to visit his father, Earl, in the hospital hours before he passed away. He then went to visit her and they had sex. She said she was in bed with him at about 2 or 3am when he got the call that his father died. She described the moment as awkward.

As embarrassing as that claim was for Woods, the worst part of the show for the golfer was likely the graphic discussion of his sex habits.

Ferriolo said that she did not have sex with Woods until the third date, and that he would spend tens of thousands of dollars to fly her around the country.

She also said that, on occasion, he liked to bring women into bed and have them have sex with each other while he sat by wearing a business suit.

Also, when asked if her boobs were real, she said they were “real expensive.”

In the end, Stern said he was taken by Jungers story, and that she was a “true mistress.”

She got $75,000. Grubbs got $15,000 for second, and Ferriolo got $10,000 for third. The money was put up by the dating site AshleyMadison.com, which arranges adulterous relationships. (See above.)

Perhaps the perfect investment?
A young Scottish lad and lass were sitting on a low stone wall, holding hands, gazing out over the loch. For several minutes they sat silently. Then finally the girl looked at the boy andsaid, “A penny for your thoughts, Angus.”

“Well, uh, I was thinkin’… perhaps it’s aboot time for a wee kiss.”

The girl blushed, then leaned over and kissed him lightly on the cheek.

Then he blushed. The two turned once again to gaze out over the loch.

Minutes passed and the girl spoke again. “Another penny for your thoughts, Angus.”

“Well, uh, I was thinkin’ perhaps it’s noo time aboot time for a wee cuddle.”

The girl blushed, then leaned over and cuddled him for a few seconds.

Then he blushed. And the two turned once again to gaze out over the loch.

After a while, she again said, “Another penny for your thoughts, Angus.”

“Well, uh, I was thinkin’ perhaps it’s aboot time you let me put my hand on your leg.”

The girl blushed, then took his hand and put it on her knee.

Then he blushed.

Then the two turned once again to gaze out over the loch before the girl spoke again.

“Another penny for your thoughts, Angus.”

The young man glanced down with a furled brow “Well, noo,” he said, “my thoughts are a wee bit more serious this time.’ “Really?” said the lass in a whisper, filled with anticipation.

“Aye,” said the lad, nodding.

The girl looked away in shyness, began to blush, and bit her lip in anticipation of the ultimate request.

Then he said, “Dae ye nae think it’s aboot time ye paid me the first three pennies?”

Favorite cartoon.

On second thoughts. I no longer think this cartoon funny.

Harry Newton, who’s eyeing strong February retail sales and is optimistic. When retail flies, so does Google. I wish there were some correlation between retail and my tennis game.