the overall market lately has been bearish for 2008, with crude oil prices skyrocketing, and the subprime mortgage debacle just destroying the banking industry, and also the rest of the economy.
however, given all that, i do like many of the major banks at the moment. they have been hit hard, and accordingly so, given the huge write offs that the banks have taken from their losing bets on these subprime mortgage positions. however, i do think the worst has passed, and thus i've recently bought into UYG- a proshares fund for the financials, and also opened up a position in puts for Citigroup (C), with a 20 strike price for April 08. The premium given allows for a 12% downside to break even, but also offers a max 7% gain if the stock stays above 20 dollars.
I also like SBUX, or Starbucks, especially with Schultz back as CEO. I do think the company has hit a bottom, so I've taken out another put position at 17.50 for April 08. My position allows for a 3.5% drop from its price of 17.1 before I start to lose money, but also a 3.5% gain if the stock stays above 17.10. I do think SBUX will rebound in the next few months, which leads me to feel secure about selling some puts on this stock.
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