Bottom falls out of SPLS for no reason.

Tripled down on SPLS after a huge dip this morning on meeting Q4 expectations. More later.

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.    

SPLS 42% gain in one day on Jan 2013 Call $17.50 Strike

Thought it would be good to inform everyone as to the options I am currently holding in interest of full disclosure as well as to let you know the stocks I think have long term positive moves ahead of them. But most of all I wanted to show the 1 day gain that happened on SPLS today!

How about a 42% return in one day of trading! A 5% gain in the stock price gave a 42% gain in the option price! Again, the amount of money I am trading is miniscule ( student, no job, no income ) but if I traded out now I would net about 31% on my total investment. Of course with trading commissions that would be cut in half, so I'm holding on for a long term play with the stock moving toward $19.

Remember, options are risky. A bad day of 5% down can have just as large a negative effect as today was up. But I will take a 42% day any chance I get!

As for the other holdings, PEP continues to look very promising. I got in on the initial drop so my returns are down for now. This is a long term play so I'm not really worried if this one takes a year to show profit, but PEP is still showing 6 days of momentum after the bounce I wrote about last Tuesday. At the time I wondered about lowering my cost basis and doubling down, had I done that I would be close to profit already.

Thanks for reading,

 Straight From The Chart!

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.   

SPLS - Breaking Out / The Good and Bad of Trading Options

 

Can't deny the great trend happening with SPLS (Staples) right now. SPLS has gained a hefty 3% plus today in early trading, I'm expecting that to pull back a bit as investors take profits on a great day of trading. But I'm not as happy about the 3% day as I am with the trajectory of the stock price. Its been on a solid trend for months and continues to show breakout patterns that have held true. I'm watching for resistance around the $16.50 level but if it gets past that number it could be smooth sailing to around $19.00.

Today is a great example of how trading options can be a great way to make (or lose) money on strong trends. I am holding one Jan 2013 Option on SPLS with a $17.50 strike price. I got the option at $.80 / share and it is now trading at $.95 / share most of which came from today's move. With options you get rewarded, or destroyed, based upon momentum and a strong uptick in a positive momentum stock can mean big movement in the options. For example, a 3% move in SPLS stock price today gave a 26% gain in stock price today alone. Today's movement gave a $20 gain on an $80 investment.

Now my investment numbers are tiny because all I have is $1000 and a dream. But any investor with real figures to invest could have netted 26% gain on a relatively tiny 3% move. HOWEVER, the pendulum swings both ways. Getting in an option heading in the wrong direction could lose 26% on a 3% downward shift just as easily. That's why it is so important to pay attention to trends before buying, know the company, know the chart.

That being said I'm holding on to SPLS for the time being, I think the stock goes to $19.00. We'll watch it and see what happens. They are reporting 4th quarter results tomorrow, if it goes well - which I'm expecting - it could go even higher. The move today is likely the result of Office Depot reporting higher than expected numbers. Look for the same from Staples.

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform.  

PEP looking good! - But expect more.

I made my PEP call on 2/21/12 and it has been positive momentum ever since. Though gradual, PEP is moving in the direction I thought it would after hitting resistance on Tuesday. PEP is a better company than a few layoffs will make you think, and it seems to me to be a move towards operational efficiency more than a move towards lower performance expectations.

PEP is going right back to where it came from. IMHO there is still plenty of time to jump on PEP as this is a long term play with lots of room to run. The recent pull back was merely creating a great buying opportunity to get a quality stock for much less than its worth.

I am still holding my January 2014 options with a $75 strike price which has gone up 6.5% today as it has benefited from momentum on only a .14% uptick in stock price. Again you get rewarded or killed on momentum in the options game. I paid the price big time last week on bad momentum so I'm still down on my trade over all. But this is just the beginning for this stock.

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform. 

PEP has bounced - Great buying opportunity

PEP (Symbol for Pepsico Inc.) is fresh off a week long decline that started when they released their quarterly financial statements for the 4th quarter 2011. Although Pepsico Inc. beat its financial projections it predicted higher advertising costs going into the American market in the coming year and forecast layoffs in the coming year to help pay for that. Several people became very worried that this was a bearish signal by the company because in the past several years layoffs have been a sign of bad bad things happening in the financials. However I don't think this is the case here.

We can take a page from Proctor and Gamble in this regard who just announced layoffs, not because results are down but because it no longer needs all of the advertising employees it once did. (Click HERE to read about it) It seems that creating a big ad push like Pepsi is doing no longer means dozens of employes logging thousands of man hours. Rather it means a few dedicated individuals manning twitter, and Facebook backed with a few well timed and effective ad spots. I think what Pepsico is doing with the layoffs is in the same vein.

PEP took a huge dive last week when the numbers came out. (see chart below) I jumped in right away recognizing it as a buying opportunity. Again I am only starting with $1000 dollars so I don't have a ton of money to put into a $70 stock, so I bought some options instead. I bought January 2014 Call Options with a $75 strike price. With options you get rewarded or killed based upon momentum. The options I bought cost $1.53 per option so 2 contracts put me in $306. What I didn't expect was that PEP would continue its downward momentum and it cost me. PEP didn't lose much in the stock price but the option got killed because downward momentum continued for a few days. Today (Tuesday 2/21/12) my options contracts are worth $258 which is roughly a 16% loss on this trade thus far. But good news is that today it is headed up, and IMHO on its way back to levels seen before the 4th quarter announcement. This will turn into a big gainer, Pepsico is a great company performing very well, these layoffs are nothing to worry about in the long term health of the company.

I might be doubling down on PEP but I have to free up some cash, perhaps sell my F (ford) options to free up some cash. I'll update and let you know what I do.

UPDATE: My money is tied up in other options I like already. Still think F is a great long term play so I'm just going to let PEP ride. No money to double down at this point.

Disclaimer:
Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and woefully undereducated guesses as to how I think a few stocks are going to perform. 

$1000 and a dream.

Hello world! This is the first of my blog entries for 'Straight from the Chart', a blog about my journey through the world of amateur stock picking and high finance at the lowest possible levels. This blog is about me having $1000.00 and a dream to be a great stock picker.

I've been reading books for years written by Peter Lynch, Jim Cramer, and Donald Trump about this world of investments but I've never had any money to put into the market. Well I was able to free up $1000.00 and I decided that I was not going to wait any longer. So I have set out on my journey to pick some stocks, track my progress and see how it goes. This blog is meant to document the process of what stocks I've picked and how they've performed.

Just to be clear, nothing that I'm posting on this blog is in any way advice that should be followed by anyone else. All investment decisions should be made carefully by all individuals taking into account their own financial situation and appropriate levels of risk. Do not take anything I say for anything more than it is, opinion, speculation, and slightly / but woefully undereducated guesses as to how I think a few stocks are going to go.

First a bit about me:

I am an MBA student with no job, no income and little more than a thousand bucks and a dream. I came into the thousand dollars I have by selling a small (actually tiny) business. Before I started the MBA program I was in business with a partner making high end musical equipment for professional recording studios. Upon entering the MBA program they had me sign a paper saying that I would not attempt to maintain employment or any entrepreneurial efforts while in the first year of the program, so with that the business had to go. I got $1000 out of it and started the program in August of 2011.

That $1000 sat in a worthless checking account until I wasn't able to put off the urges any longer and I decided to put it into some stocks at the beginning of 2012. To my surprise January was a great month in the market and my portfolio quickly grew! Within one month I had increased my investment by 30% compared to just 5% for the S&P 500 index! My biggest stakes were in BAC (Bank of America) and F (Ford) during this time and they both performed excellently.

So now I had $1300 with February right around the corner. Analysts were all predicting that February was going to give back many of the gains of the previous month and they were right. A few weeks later, and a few more trades under my belt and the account is now $1190.  Though this still constitutes a 19% gain on investment in a month and a half I think I can do better. This is what I am out to prove with this blog.

So with that as an intro lets get started on picking some stocks!

Here we go...