Here’s the transcript for this week’s Live Q&A Chat. Join us next week at 2pm EST at TradingWithCody.com/
My best attempt at A’s to your Q’s.
Q: Cody, if FB pops from earnings at what level would you look to sell some of the position?
A: My first boss on Wall Street once screamed at me and sent me home for celebrating having opened a big account because “you don’t want to jinx it. Don’t celebrate until the check is in the bank and has cleared.” I mocked the idea even as I stormed home with steam blowing out of my ears, angry that he was angry at me when I’d just seemingly opened him a good opening-sized account from a big investor. I understood what he meant weeks later when that check never came and the guy never answered our call again and I ended up eating a $3000 loss for the firm. Anyway, IF FB pops, I’ll tackle how I’ll trade it when it happens. I’d likely trim more if FB were to get back above $70 where I’d trimmed it last time anyway.
Q: Cody, FB earnings tonight. what are the chances that FB go down after results today. Sometime back you answered a user question regarding buying calls and puts simultaneously before earnings. Do you think FB is such candidate? For short term into earnings, which options are better calls or puts. What is your feet to fire expectations into earnings?
A: Good question. I’d rather be long than short FB into tonight’s call, simply because I think earnings and revenue growth will again be so strong. Sentiment is probably not as “bad” as I’d like to see it into the report tonight, and that could mean the stock could sell off tomorrow if the growth isn’t as strong as I and others expect. If I were to try to buy both calls and puts into tonight’s report, I’d look at doing a few more calls than puts and doing slightly in-the-money. You could alternatively short both calls and puts instead of buying them, but that’s not a trade I specialize in. Good luck!
Q: Any new or changed perspective on $INVN or $JDSU?
A: I’m working with Lucy Bottrell on a full book called “Drone Revolution – What it is and how to invest in it” or something like that. I still think both of those are good basket plays for the Drone Revolution and I want to understand the entire Drone Revolution trend and where its going, so we are deep into it. Much more to come on it in the next month.
Q: Cody, any thoughts on bank stocks? I’m holding BAC, WFC and BOFI right now. I’ve read predictions that BAC and WFC will gain in value, but that BOFI is overpriced and is not such a good investment.
A: I need time to recover from my recent stupidity in shorting bank stocks. I wrote this about JPM last week, as I covered the last of my Short Welfare Bank Basket. “The key is to limit the losses, both real and opportunity losses, as much as possible. And to keep emotions out of your trading and investing and analysis. JPM has fallen 10% since I last wrote about it. I’m still down big on this short “hedge” and I’m still not happy about that. I think it is time to remove the last of my bank short hedges and allow myself a little space and time away from the sector. I’m covering my JPM short position.”
Q: Have a question regarding positioning of assets which have limited investment options…speaking in particular about 401k monies. I moved percentages of my 401k into cash (money market) in phases and before this last pullback I moved the rest of those funds into cash…so now 100% of 401k in cash. What would be your advice for the timing of moving these funds back into the market? I’ve preferred to put them into a very low fee 2040 target fund which has performed well over the last couple of years…and I know you don’t like 401Ks…but think of this as advice for your mother as well.
A: How old are you, are you still working, is your income potential high, how much do you have in other portfolios? I’d need answers to questions like that and more before I’d be able to help you with an answer more specific than: “Slowly scale into some high quality mutual funds and get your exposure back up over the course of this year and then slowly scale out on strength and scale into more exposure on weakness.”
Q: Cody ~ I’m underwater on some $535 AAPL May 17 calls I bought in early March. Going into tonight’s earnings release I would appreciate your thoughts on whether to sell-off the calls this afternoon or hold them through the earning release.
A: Nothing has changed for AAPL’s set up here into tonight’s call since I also bought those call options. If we get any hint of momentum traders/growth investors sniffing on AAPL any time soon, the stock will run $100. I do think sentiment is very low heading into tonight’s earnings report and if AAPL can say iPhone or iPad sales are even just about “as expected” I think the stock would pop 5% or more tomorrow. On the other hand if they miss and units sold are off and guidance is bad, the stock will get hit 5% or so tomorrow. I’d rather be long than short AAPL into tonight’s report based on sentiment alone.
Q: Can you give any additional prognostication on gold miners in the near/mid term? I have some Sept and Jan miners calls that are under water…wondering if that’s enough time for the ship to right.
A: I’ve been looking at and really like this ITC so far in what I’ve seen in it. Still working on it, but it’s a Revolutionary Investing concept. “We’re Your Energy Superhighway! ITC Holdings Corp. (NYSE: ITC) invests in the electricity transmission grid to improve electric reliability, expand access to markets, lower the overall cost of delivered energy and allow new generating resources to interconnect to its transmission systems.”
Q: What did you think of Juniper earnings? Wells Fargo apparently thought the quarter was good and that Q2 has upside.
A: I thought the Juniper quarter was indicative of continued growth and strong demand for their core routers as well as good profit management. I would have liked to have seen more upside to the guidance for next quarter, but this is still a steady-as-she-goes investment for now.
Q: Cody, what are your thoughts on YNDX, I am still holding calls
A: Nothing new on the YANDEX trade since last week either. Steady as she goes. I made my bet. It has til August to play out. Here’s some more info on Yandex, tho not from me. “Russian search giant Yandex (NASDAQ: YNDX ) will report its first-quarter earnings on Thursday, as shares have stumbled out of the gates in 2014. Turmoil in its major markets of Russia and Ukraine have significantly weighed on the stock in the first few months of the year. The company is in a strong position, nonetheless, controlling over 60% of the search market in the growing Russian Internet population. It has made strategic partnerships with Google (NASDAQ: GOOG ) (NASDAQ: GOOGL ) and Facebook (NASDAQ: FB ) to improve its products, but is still battling the former in every market.”
Q: Cody I’m using common stock for YNDX, rather than calls as you made mention of a few weeks back. Any near-mid-term prognosis change? Thoughts on earnings tomorrow morning (4/24)?
A: I used a tiny bit of speculative capital to buy August call options for my Yandex bet, thereby limiting any losses to that tiny bit of speculative capital. I have no edge for you on Yandex earnings.
Q: As for a new stock in a new area- I’ve been looking at ITC. They are a utility building out the grid to accept new technologies- any thoughts?
A: I’ve been looking at and really like this ITC so far in what I’ve seen in it. Still working on it, but it’s a Revolutionary Investing concept. “We’re Your Energy Superhighway! ITC Holdings Corp. (NYSE: ITC) invests in the electricity transmission grid to improve electric reliability, expand access to markets, lower the overall cost of delivered energy and allow new generating resources to interconnect to its transmission systems.”
Thanks Cody- let us know if you delve further into it- I think it might be a real winner-
Q: You content with holding just LNN or would you consider adding AEGN to the portfolio and joining Robert Marcin on that one?
A: Still considering adding AEGN. I like both a lot over the next five to ten years.
Q: I’ve been reading that Nike is cutting back on their wearables- do you still see wearables as a huge futuristic thing- will other cos go after this- what kind of applications do you see- health? fitness?
A: NKE is not the right company to drive the wearables revolution. Wearables will be much bigger than just “Hey, my shirt can track how far I ran.” Three to five years out for them to go mainstream at least though.
Q: Cree’s guidance was the only thing that appeared subpar, what’s your take? Buy more on this dip?
A: $CREE is still very expensive stock. I’m holding mine steady as I’m looking out over the next five to ten years on this one as I’ve said. I’ll buy another tranche if it gets below $50. Long CREE common
