written by reader Options, understandings and tactics

By megfk, April 25, 2014

Alan – We open here a forum for discussing options. It might be helpful to open the discussion with a copy of the paragraphs that I wrote 4/24 about options. I don’t know how to cut-and-paste that material.

Before I opened this discussion forum, I noticed a question about choosing a stock that might perform well as an option. I’ve already briefly addressed the subject…and would appreciate knowing about the thinking of others.

I have years of experience, but could not pass myself off as an ”expert.” I prefer that this discussion forum be a gathering of investors with an interest in options…with all of those with greater experience contributing things that they have learned. Our goal is to benefit one another.

This is a discussion topic or guest posting submitted by a Stock Gumshoe reader. The content has not been edited or reviewed by Stock Gumshoe, and any opinions expressed are those of the author alone.

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SoGiAm
Irregular
December 7, 2017 12:29 am

$AR Registers #TwentyFold Volume Antero Resources (AR – NYSE)
http://www.bottarelliresearch.com/free/2017/12/06/ar-registers-twentyfold-volume by Bottarelli Research Wednesday, December 06, 2017
Detecting the most unusual trade wasn’t difficult today. Have you ever heard of Antero Resources AR – NYSE? Neither had we, not until someone bought 5,000 AR February 20 calls for $0.55 each…
Also posted on the #Oil – #BlackGold, #TexasTea thread: https://www.stockgumshoe.com/2016/05/microblog-oil-black-gold-texas-tea/ Best2AllAlwayz! – >>>–BenJammin’————-> 🙂

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SoGiAm
Irregular
December 7, 2017 7:11 pm

$SBUX: Is SBUX Good for Some Holiday Cheer? Starbucks SBUX NASDAQ http://www.bottarelliresearch.com/free/2017/12/07/sbux-good-holiday-cheer

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SoGiAm
Irregular
December 9, 2017 7:24 am

TTG Top Aggressive #option activity
CALLS: $TEVA $VRX $WDC $MDT $ETSY $INTC $XLE $MAC $RVNC $PZZA $JACK $GSK $CRR $MOMO $AKS $TRN $BSX $NCLH $ADSK $SHAK $HTZ
https://twitter.com/cfromhertz/status/939250274430046209

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SoGiAm
Irregular
December 12, 2017 11:28 pm

$ONCE Upon a Biotech Free-Fall… Spark Therapeutics (ONCE – NASDAQ)
by Bottarelli Research Tuesday, December 12, 2017 http://www.bottarelliresearch.com/free/2017/12/12/once-upon-biotech-free-fall

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SoGiAm
Irregular
December 13, 2017 5:01 pm

$SERV – The Most Unusual Options Trade You’ll Ever See
ServiceMaster (SERV – NYSE) http://www.bottarelliresearch.com/free/2017/12/13/unusual-options-trade-youll-see

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SoGiAm
Irregular
December 14, 2017 5:02 pm

This China $EDU Trade Just Set the Curve
New Oriental Education & Tech (EDU – NYSE)
http://www.bottarelliresearch.com/free/2017/12/14/china-edu-trade-set-curve

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SoGiAm
Irregular
December 16, 2017 12:40 am

$ADI – Expect Semiconductor Stocks to Stay Hot
Analog Devices (ADI – NASDAQ)
http://www.bottarelliresearch.com/free/2017/12/15/expect-semiconductor-stocks-stay-hot

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SoGiAm
Irregular
December 19, 2017 8:32 pm

$WEN – Watch for a WEN Buyout Wendy’s WEN – NASDAQ http://www.bottarelliresearch.com/free/2017/12/19/watch-wen-buyout

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SoGiAm
Irregular
December 22, 2017 5:43 am

Can $GOOS Keep Going? Canada Goose GOOS – NYSE http://www.bottarelliresearch.com/free/2017/12/21/goos-keep-going

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Bob Koch
Irregular
December 31, 2017 9:46 am

Hi
I’ve tried over two dozen advisory services and NONE have delivered a consistently profitable performance.( If one had, I would have stayed with it)
I’ve done best when doing my own DD, using what I’ve learned from the various services about position sizing, stops, etc.
It’s like Travis said, “ you can make a little money if you have a lot of money”. I think trading will be an expensive hobby, not a retirement income!
BOB K

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SoGiAm
Irregular
February 23, 2018 11:17 am

$HOV Bought to open (Long) Aug, 2018 $1 calls…
If you want to own the stock, what is the best put option to sell? TIA

A $73 Stock Trading for $2.24?
by Bottarelli Research Friday, February 23, 2018
Want to leverage the power of options? Then listen up, because it doesn’t get much better than this…

Hovnanian Enterprises HOV – NYSE is the tenth largest homebuilder in the country. At the height of the housing bubble, HOV was a $73.00 stock. Currently, it trades for $2.24.

Over $4 billion of market value has been wiped out, leaving a current valuation of $314 million. Meanwhile, other homebuilder stocks are up big over the last 52 weeks…

Toll Brothers TOL – NYSE is up 42%.
PulteGroup PHM – NYSE is up 36%.
D.R. Horton DHI – NYSE is up 46%.
Lennar LEN – NYSE is up 28%.
So why has HOV underperformed?

Hovnanian is still struggling to get out from underneath a mountain of debt built up during the housing boom. As a result, the company’s bonds are pegged as junk. Plus, a default on an interest payment this past spring rattled investors.

You see, GSO Capital Partners bought credit-default swap contracts that paid out if HOV missed a coupon payment. Then, GSO agreed to refinance Hovnanian’s debt if they agreed to skip a payment — allowing GSO to get paid on their default contracts, and Hovnanian to avoid bankruptcy.

The problem is, the hedge fund on the other side of the trade with GSO (which most likely lost money) contested the deal in court. Although similar transactions have gone through in the past, and Hovnanian defended its role in the deal as a way to strategically manage debt, the stock still dropped nearly 40% this year.

So now is HOV too cheap to ignore?

According to Barron’s, “At these distressed levels, Hovnanian offers an interesting speculative bet, because more than a decade’s worth of problems are reflected in the price.”

An anonymous distressed-company investor said “It doesn’t take a lot to get this stock back to $4.00.”

What could be a future upside trigger?

Real Estate Rebound: Construction of new homes increased last month according to the Commerce Department. Also noteworthy, the homebuilding industry built fewer private homes last year than in 1981, when the U.S. population was a third smaller. A rising tide in real estate could finally begin to lift HOV.
Legal Resolution: A successful resolution of HOV’s legal issues could bring value investors back into the shares.
Profits: Wall Street analysts expect HOV’s earnings per share (-$2.25 in the year to last October) to be -$0.03 this fiscal year and -$0.01 in October 2019. If HOV can beat this expectation — and perhaps even come in positive — shares could significantly bounce.
Takeover Talks: On any sort of acquisition rumor, which could certainly trigger at any moment given HOV’s valuation, shares could move smartly higher.
Not only that, but HOV’s past losses have created a massive carry-forward tax loss — up to $2.1 billion in future profits.

From a chart perspective, HOV has been setting a series of rising bottoms, indicating the lows just might be in. With housing purchase prices rising by an average of 6% annually for the past five years, this looks promising.

HOV
But how should you play it?

Right now, you can buy the HOV August 1 Calls O:HOV 18H1.00D17 at $1.20 to $1.50 per contract. With the stock currently trading at $2.33, that means you’re paying virtually nothing to carry this position.

Specifically, for every contract you own, you’d have the right to buy 100 shares of HOV for $1.00 per share anytime between now and August 17.

If HOV happens to trade at $4.00 by August, these calls would be worth $3.00, good for a 130% gain. To us, this is a speculation worth making.

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SoGiAm
Irregular
February 23, 2018 1:10 pm
Reply to  SoGiAm

$HOV – 20180308 > Hovnanian Enterprises Announces First Quarter Fiscal Year 2018 Earnings Release and Conference Call http://globenewswire.com/news-release/2018/02/22/1380198/0/en/Hovnanian-Enterprises-Announces-First-Quarter-Fiscal-Year-2018-Earnings-Release-and-Conference-Call.html

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Ritam108
Irregular
Ritam108
October 16, 2018 8:02 am

Is there any update since Feb 2018 on discussing options? Has this discussion been relocated on this site?
thanks!

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