What a wild week it was and what a year it has been already. The markets have put in at least a short-term bottom at Wednesday’s lows, just almost exactly the same time as the time stamp as when I sent out that Trade Alert on Wednesday as I bought some call options in Under Armour UA, Facebook FB and Sony SNE. As I’d mentioned then, there was finally some panic to the sell-off intraday when the DJIA was down more than -500 that morning and down almost exactly -2000 points on the year. Those call options have bounced nicely, up 30-50% as the broader markets here caught a bid with that panic having abated and the markets are up 3-5% from their intraweek lows.
I’d bought UA, FB and SNE call options that were dated out to June and July and I’m going to just let them ride for now.
If you’re new to options, see page 25 of me book “Everything You Need To Know About Investing” which you can read for free here. There’s a whole chapter about “Options Demystified.”
And if you’re risk-averse and/or don’t want to trade options for any reason, you can always consider just nibbling on some common stock for the same symbol when you see me do a call option. In fact, if you missed Wednesday’s trade, I’d probably look at just nibbling on the common stock instead of the call options at this point since we already saw the $UA, $FB and $SNE call options bounce 30-50%.
I’m working on $AXP as they have $25BB in net cash and long-term investments and no debt. Market cap is just $55BB and they should earn nearly $6 billion in 2016. The big problem is that $AXP appears to be struggling against technology instead of embracing it. Maybe 2016 is the year they embrace the Tech Revolution. The stock is down 12% today after a disappointing earnings report and is down 40% in a straight line over the last few months and is now on my radar as being “cheap enough to dig further” as its enterprise value to earnings ratio is just about 5x when you ex out the $25 billion in net cash on the balance sheet from the market cap. It’s less than 10x this year’s expected earnings on a straight P/E. I’ll let you guys know.
And here’s yet another energy name that I’m avoiding that I was asked about just this morning in the Trading With Cody Chat Room:
$NOV has a relatively strong balance sheet with $3BB in cash and $3BB in debt, whereas most of the energy stocks I’ve looked at are highly leveraged with little cash. I don’t know the company though and this “National Oilwell Varco, Inc. designs, manufactures, and sells equipment and components used in oil and gas drilling, completion, and production; and provides oilfield services to the upstream oil and gas industry worldwide” sounds like a product line that’s about to see its customer base totally collapse as the entire energyconomy is like the teleconomy was back in 2001 as I’ve explained before. I wouldn’t want to try to game this one at all.