Trading With Cody Is Ten Years Old!

I just realized that today is indeed the Trading With Cody 10-year anniversary as I started writing on March 9, 2011! Here’s a screenshot of what we looked like at launch via the WayBack Machine.

Here’s a link to the first post.

“Well, I was up at 5am here in NM time, talking about cattle trading, inflation, the fallacy of a difference between the Republican and Democrat policies despite each of their respective claims of being otherwise, and…the opportunity in buying long-dated, Cisco calls. The stock is trading at about 7x next year’s earnings, when you account for the nearly $6 per share in net cash on their balance sheet.

While I’m not getting comfortable paying the premium in the Corning calls, that outsized premium in the Corning calls especially relative to the premium in the Cisco calls, is in large part because of the recent direction of both the stocks and the earnings estimates. Corning’s stock has been strong — very strong, as it remains within a dollar of its recent 52-week highs — and likewise, Corning reported a very strong quarter last quarter and saw its forward estimates raised. Meanwhile Cisco stock’s at a 52-week low mainly because the company has disappointed Wall Street by missing estimates and guiding the next quarter’s estimates lower the last couple quarters.

When you break it down with the current $2 or so ask quote for the current Cisco January 2013 calls with the $20 strike price, you’re paying a 10% premium for the right to buy Cisco in January 2013 at about 10% above its current quote. The $25 January 2013 call options in Corning, on the other hand, what with their current $3 plus quote, right now, will cost you a nearly 15% premium for the right to buy the stock nearly 15% above its current quote.

I think both stocks are very inexpensive and poised to head higher in the next couple years from their current quotes right here, right now. And given that I do expect each stock to rally more than 50% above their current quote in the next two years, that means that I’d love to use the leverage that comes with using out-of-the-money call options to really make some big returns on the capital risked, but because of the premium differences, my potential gains on Cisco rallying 50% in coming weeks vs. a 50% move in Corning is also a huge difference.”

Thanks to all of you for being a part of Trading With Cody, many of you for pretty much this whole decade of existence. Let me know if and when you pass your ten-year anniversary and we’ll send you a Trading With Cody hat and T-shirt. And please send us along a testimonial regardless of how long you’ve been a subscriber to Trading With Cody. We’d love to hear from you and I’ll send along a Trading With Cody hat or shirt to some of the best ones.