by Don Fanstone, Member, Kitchener/Waterloo VectorVest User Group
CNR: Reported rising earnings and a dividend increase. Added Sept. 72 Call Options at $14.75.
GWO. Great West Life. This insurance company is a steady performer. It trades in a channel between 29 and 36 or some part of it. I have traded this previously and realized gains. They report on Feb. 11th. This is not a company you would buy options based on the graph. it pays a dividend of 3.8%. GWO has a relatively new operation in Ireland (Irish Life) and a Mutual Fund Co. in the USA that has been a drag on earnings of the profitable segments. With GWO being part of the Power Group, a very successful operation, they will succeed and grow in due time. Added July 28’s @ $4.15.
Open Text (OTC) recently had an unfavourable earnings report and dropped from $74.26 to $67.79. It is now back to $71.02 all in a matter of a few days. OTC has been a top performer with a VST of 1.38 and is now at 1.34. I do not own OTC, however, it serves to show that it is not always wise to hold options over an earnings report unless you are confident of the outcome through good research.
Avigilon (AVO) I have owned AVO and lost money due to holding profitable options over an earnings report that to me was OK, but not to the analysts. The profitable position became a loss much to my chagrin. Currently, AVO is moving up steadily and faces resistance at $19.78. This is a very profitable company with a potential to reach new highs. Options on this are speculative until the company can put it all together. (You’re better off to buy CNR!)
Oil Companies: Best to stand aside at this time. Picking the bottom is difficult. Build a watchlist of the stocks that have favourable comments published on them. CNQ, SU, VET, MEG, CPG, and any others that you see as being rebounders. The day will come when the world will change for the better and there will be BUYS that will lead to profits.
DISCLAIMER: Options trading involves risk and is not suitable for everyone. The information contained in this Blog is for education and information purposes only. Example trades should not be considered as recommendations. Options training is strongly recommended before placing any trades. VectorVest offers a basic options course online and occasional intermediate options workshops in Canada each year.
Thank you very much for sharing your opinions and expertise. It is interesting.
One thing I would like to know is about Implied volatility and volume. Do you look at these numbers? Are you looking for any minimums? Is this important when the time comes to sell?
Daniel, I do look at the volatility numbers, and if they are what I consider high, I usually do not Buy the Calls as the premium is usually too high a price to pay. Alternately, if I am holding a Call Option and the volatility shoots up, that is an excellent time to sell and gain the higher price.