RECENT PRIVATE EMAIL QUESTION
Herm...i have been reading messages since may and they are most
helpful..thanks for having a great training site....i am not to good
on posting etc.so hope this gets to you...i would like to know how
you would handle WINS strategy in out of favor stocks like the dow
dogs...with market down etc they dont reach top BB as often as some
stock you are using...since this is a ongoing portfolio of stocks i
will have to see if i can modify WINS for the dogs...any suggestion
would be appreciated...btw i grew up not to far from Naples at
LaBelle... thanks signed XYZ
ANSWER:"Let the trend be your friend!" W.I.N.S. tool box to rescue!
Take out the W, N, and S. Let's get to work. I picked the GT Dow Dog!
Bark, Bark! What a lemon! Down -24% YTD! Let's make some sweet
lemonade with with this sucker. Growth rate 9.2% with a 9.8 P/E. Man,
I'm falling asleep just writing down the numbers! :-) A very
conservative stock for mom and pop in Florida! That's ok! Where are
the brokers when you need them?
Looking at the GT chart for the last two years shows that GT is
dropping down to the $44 bottom support level set TWO years ago. The
stock TREND IS DOWN!
bigcharts.com
How would I apply W.I.N.S.? Simple!
1. Buy three GT 40 JAN00 LEAPs @ 13 1/8 to avoid having to fork over
too much money. After all, the stock at $47/share means $4,700 out of
your pocket vs. three LEAPs will cost you only $3,975 and the rest is
in cash. So, here is the math:
$40 strike JAN00 LEAPs
$13.125
--------
$53.125 net cost basis for breakeven in the stock.
2. Write three GT CCs for the GT JAN. 55 @ 3 or $900 premies. $900/
$3,975 = 22.64% ROI. If you are called out you get another $55 CC
strike - $53.125 nut = $1.875 x 300 = $562.50. Total profit equals
$900 + $562.50 = $1,462.50 four months. Total ROI 36.79% less
commissions.
3. The above could eventually happen! But, GT is going downward. So,
you could play that sideshow buy buying GT PUTs. The GT Oct. 45s PUTs
@ 1 7/8s could add additional profits. Buy the PUTs with the LEAP CC
premies!
4. Feel very aggressive? Write the GT CCs JAN. 50s @ 4 5/8s instead.
Plan to cover CCs later! Buy more GT PUTs with extra premies.
5. You can pick any DOW dog and be able to look at the chart, buy
LEAPs, sell CCs, buy PUTs and make money!
Ticker Company Price Last Trade YTD
GE GENERAL ELECTRIC CO. 79 1/4 09/11 04:31 pm +8.0%
XON EXXON CORPORATION 70 9/16 09/11 04:01 pm +15.6%
KO COCA COLA CO. 62 7/16 09/11 04:03 pm -6.4%
MRK MERCK & CO. INC. 128 09/11 04:00 pm +20.8%
WMT WAL-MART STORES, INC. 60 5/8 09/11 04:03 pm +53.7%
IBM INTERN. BUSINESS 126 9/16 09/11 04:30 pm +21.0%
MO PHILIP MORRIS, INC. 43 09/11 04:19 pm -5.0%
JNJ JOHNSON & JOHNSON 76 3/8 09/11 04:17 pm +15.9%
PG PROCTER & GAMBLE CO. 67 3/8 09/11 04:18 pm -15.6%
T AT&T 55 15/16 09/11 04:00 pm -8.8%
DD DUPONT (EI) 56 5/8 09/11 05:01 pm -5.7%
CHV CHEVRON 82 1/2 09/11 04:11 pm +7.2%
DIS DISNEY 25 13/16 09/11 04:39 pm -21.8%
HWP HEWLETT-PACKARD CO. 50 09/11 04:28 pm -19.8%
TRV TRAVELERS GROUP 40 7/8 09/11 05:01 pm -24.1%
GM GENERAL MOTORS CORP. 56 7/16 09/11 04:01 pm -7.1%
MCD MCDONALD'S CORP. 59 3/16 09/11 04:09 pm +24.0%
AXP AMERICAN EXPRESS CO. 78 3/8 09/11 04:22 pm -12.2%
BA BOEING COMPANY 34 +1/8 09/11 04:06 pm -30.5%
MMM MINNESOTA MINING 71 9/16 09/11 04:00 pm -12.9%
EK EASTMAN KODAK CO. 78 09/11 04:01 pm +28.8%
ALD ALLIED-SIGNAL INC. 33 9/16 09/11 04:04 pm -13.5%
UTX UNITED TECHNOLOGIES 76 11/16 09/11 04:01 pm +5.3%
S SEARS, ROEBUCK & CO. 45 3/16 09/11 04:00 pm -0.1%
CAT CATERPILLAR INC. 45 1/4 09/11 04:23 pm -6.7%
JPM MORGAN JP & CO INC 90 1/8 09/11 04:01 pm -20.2%
IP INTERNATIONAL PAPER 41 11/16 09/11 04:06 pm -3.3%
AA ALUMINUM CO. OF AMER. 68 1/16 09/11 04:02 pm -3.3%
GT GOODYEAR TIRE & RUB. 47 9/16 09/11 04:01 pm -25.2%
UK UNION CARBIDE CORP 38 1/4 09/11 04:01 pm -10.9%
Pick any of the DOW stocks and apply W.I.N.S! |
