Trade Alert: Taking some profits on our Sony call options

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Now onto today’s report. Today the Central Bank of Japan said they are instituting a negative interest rate scheme in large part to try to devalue their currency again. It worked. And the Fed just got another reason to cut its own rates and create new forms of Quantitative Easing and/or negative interest rates of its own.

We’ve got the EU and Japan now with negative interest rates while the Fed is supposedly going to raise rates this year? The Fed’s hands are tied and we can expect lower rates and more easing in the US as the Fed/government tries to devalue our own currency. I’ve long explained that the Currency Wars in the world in the 21st Century are a race to the bottom including in this article called Why the currency wars are likely to hit the stock market from almost exactly one year ago today when the markets were at all time highs.

One stock I do still own that is also impacted by all of this is Japan-based Sony SNE. A weaker Yen is good for Sony and its export-centric businesses.

At any rate, Sony’s earnings report last night was just about exactly what I expected. The image sensor business is fading near-term as I’d said it would because customers Apple and Samsung are struggling to grow smartphone unit sales. Sony cut its forecast for image sensor sales to Yen490 billion from a previous forecast of Yen570 billion. Not a surprise either and a good sign that there’s still room to grow the image sensor business is that Sony is seeking new opportunities in the automotive business, which needs sensors for autonomous driving technology. Qualcomm and Nvidia and Sony are probably the best ways to play the long-term Smart Car Revolution for now.

And also, as I’ve been saying the TV and movie business at Sony is key and it was that division that saw the fastest growth for the company last quarter, as sales surged 27% year over year and operating income more than tripled in Sony’s Hollywood operations.

Sony’s stock is up 17% this morning and my call options that I’d bought into the teeth of last week’s panicky market sell-off are now up more than double what I paid for them.  I’m going to go ahead and sell half of those Sony call options today and will continue to hold the other half for now. We bought call options on three companies last week and we more than doubled on money on all of them. Not too shabby.