OptionPundit

Tag: HOG

  • OPNewsletter (Jul’09) +5.2% (Open)

    General Market Move Since opening of OPNewsletter Jul'09 portfolio
    General Market Move Since opening of OPNewsletter Jul'09 portfolio

    4th down week for the markets. It’s interesting to evaluate how underlyings have moved since we started our portfolios. X moved +1% to -23% and moved wildly. GDX moved from +3% to -11%, and all major market indices including S&P 500, DOW and Russell 2000 ended down, ranging from -5.5% to -6.5% (Ref point June 16th). On contrary, OPNewsletter, using 43.3% of capital is up +5.2% x-commissions.

    If you recall mid-June when we started our portfolios, the “green shoots” theory was gaining momentum (maybe still it is, but less so) and markets were making high. These pages on OptionPundit reflect my bearish bias. The problem with bear market is that you may know it is about to happen, but not sure of time. Hence we have to keep OPN portfolio to cater to upside moves as well. The strategy paid off.

    The above results don’t include returns on speculative trades of either VIX or RIMM, POT or Indonesia related Trades.

    I have been saying for sometime now Smiley I shall say it again-
    As I shared earlier, market internals are deteriorating day by day. I don’t know when will the tide turn upside down “big time”..I feel that March lows are about to be tested..if not all, then maybe a significant gains will since then might be reversed. If you have a long stock portfolio, you may want to erect defense lines while the IVs are lower and defense will be cheaper. For stocks, there is no harm in reducing the gains in order to protect and preserve capital. I’ll reinforce what I often say- Making money is not difficult, preserving it is.

    We shall soon be starting Aug portfolio. If you would like to join, pls click here.

    oNext week is an interesting one, as it has GOOG, IBM, HOG and some other great earnings’ play; option expiration is on Friday which sets it up for a highly leveraged opportunistic time. I may share some trade ideas via e-mail alerts to registered members. If you have not signed-up for free membership, you may want to join now.

    Profitable Trading, OP

  • Harley (HOG) Misses, JP Morgan (JPM) Beats

    Harley-Davidson Inc (HOG) said quarterly earnings fell 37 percent, pulled down by costs from its recession-triggered restructuring and a tax change in its home state of Wisconsin but still expecting to meet full-year shipment forecast;  “mildly encouraged” that the rate at which sales declined in the United States, its biggest market, slowed during the quarter.

    The company reported first-quarter net income of $117.3 million, or 50 cents a share, down from $187.6 million, or 79 cents a share, a year earlier. Analysts, on average, expected the company to report a profit of 52 cents a share on sales of $1.30 billion, according to Reuters Estimates

    Well, even though it missed, doesn it matter? no, its shares rose 6.2 percent in premarket trading on Thursday.  My bearish trade is going to nose dive, but thankfully those are May’09 options, so I still have time to convert those into possibly bullish spread or play intra day to reduce loss exposure. This is going to be 2nd consecutive losing trade after CSX.

    On the other hand JP Morgan (JPM) reported better-than-expected first-quarter profit as improved investment banking performance offset increased losses from credit cards and other consumer debt. Most are saying AIG Pay-outs and Mark-to-Market has no major impacts. You may wanna read an interesting article from NY Times for an additional perspective. And oh btw, where is the competition? Isn’t this good time to get rid of regulatory strings; so why shouldn’t I refund TARP funds and make more money?

    Have fun, profitable trading, OP

  • Harley Davidson (HOG), Run Away or Ride

    Harley Davidson (HOG) will be announcing results prior to market open tomorrow. The expectation is to deliver $0.52/share.

    While it can always turn tables around to beat earnings (via price increase etc), I would like to play bearish on this. Fine, I agree that it has a very loyalist customer base, the expectations are already low and all that. But consumer spending going downhill, big ticket items on hold and “needs” taking over “wants”, I don’t expect Harley to announce wonderful results. I don’t have enough information to make comments on how the financial arm doing but my gut says it might not be doing to well either.

    (You may want to sign-up for the Basic Membership (Free until Dec 2009) that I use to share free trade alerts for registered members)

    Bottom line, I am not positive about HOG announcing a great set of results and therefore will look for bearish trades (either vertical or the backspread, double calendar is also an option).

    JP Morgan (JPM) is another major company to announce its scorecard tomorrow. It’s anybody’s guess on how are they going to report especially with the developments that took place last week. Goldman (GS) reported solid numbers, inferring from that we might see positivity from JP, but hey, I have no intentions to play this one.

    Disclaimer– As of this writing, I own the mutiple bearish trades (and still have some open orders), but I may close it without any prior notice. If you do want to follow this trade, pls do your own due diligence and consult your financial adviser. There is not much time left for April expiration, should you decide to follow this trade, pls keep either a risk management plan in place or risk only the montey you are willing to lose 100%