Better Blogging

Again, I have become neglectful in updating my blog, so shame on me. I need to be more active and take my time to enter my trades both good and bad. So let's get this thing rolling with my most recent trades and thought process. First and foremost...I closed out ALL my mutual fund positions. This may be an egotistical move to think that I can do it better than "professional" investors, however I want the fluidity to move in/out of stocks. Initially, I did have some sellers remorse because the market had a nice uptick the day after I sold, but overall I am satisfied with my decision.

I know these are a bit historical, but this was my latest trade activity:

* 10/21/08 purchased Dec $15.00 put(s) XJZXO (XLF) @ $1.25
* 10/22/08 sold put(s) @ $1.88

* 10/27/08 purchased shares of U.S. Steel (X) @ $32.27
* 10/30/08 closed out all shares of X @ $38.43

* 10/01/08 purchased shares of Vasco Data (VDSI) @ $9.98
* 10/03/08 purchased additional shares of VDSI @ $9.10
* 10/31/08 closed out all shares of VDSI @ $11.33

My general thought process moving forward is to focus on energy and industrials. I will also look at getting into some options on the larger indexes.

Latest and Greatest

Finally got into Vasco Data Security INC (VDSI) via an options play. I bought a Sep 10 call for $3.70 and I like the fact that I have until Sep to let this trade play out, which is the great thing about options. I am still a newbie to the world of options and still have plenty to learn. In this volatile market, it has been my investment in calls/puts, which has earned my the most money this year. If you are an investor interested in learning more about the options, I would recommend checking out this book: "Understanding Options" by Michael Sincere. He lays out the basics in very understandable terms and it has been the book I reference the most.

Just wanted to bring everyone else up to speed on some recent trades. I have added to my position in Sterlite Industries Limited (SLT) and re-entered into Companhia Vale do Rio Doce (RIO) in after market hours trading. HAGO Justin

My Vasco Data Security Upgrade

Just a little background on why I like VASCO Data Security International INC (VDSI) and how I escaped a possible calamity in late 2007. I actually picked up some shares of this company, which was active on Investor's Business Daily 100 back in October and November 2007. I decided to sell Dec 25 covered calls to pick up some extra cash and lower my entry point. Well...December rolls around and damn if my shares didn't get called away. At the time I was a bit disappointed, but as one can now see, I was extremely lucky.

VDSI is now trading in the 11 range. This week, I was trying to get into the Sep 7.50 and Sep 10.00 calls, however they are trading a tad expensive, so I may just buy the stock outright. The market has been taking a drubbing this week, yet VASCO has fought back and gained some ground. The company is well positioned in the overseas marketplace and is well linked to the security issues the world is constantly facing.

For final disclosure, at the time of this post I do NOT own any shares or options on this stock.

Options Expiration

As the mantra in my blog states, "lessons learned good and bad," Tomorrow I have a bunch of put options that are going to expire worthless because I was over zealous with my purchases. I fell into the classic trap of buying "out of the money" puts because they were cheaper when compared with their "in the money" counterparts. One thing to always remember, when you are a buyer of puts/calls time is your ENEMY and conversely when you are a seller of puts/calls time is on your side and you want that option to expire worthless, so you can pocket that premium and then turn around and sell another option against the same 100 shares of stock. I actually find myself in this situation because back in Nov I sold a Dec 25 call on VDSI for $1.20, so looking at the price right now it is likely to expire worthless tomorrow. I am also currently contemplating selling some covered calls against my position in RIO.

Going Green

Looks like the market is picking up some steam going into the upcoming fed meeting on 11 December. Just a quick little note to let everyone know I took up a small position on the strength of the solar "GREEN" play. Because I still believe there is still volatility in the market, I decided to get into an Exchange Traded Fund (ETF), which tracks cleaner energy and conservation practices. The ETF I chose was PBW, which I got into at $24.22. It's made a nice run-up over two days, but not looking to make a quick buck on this, unless something specatcular happens. I have thought about selling a covered call on this stock, but the Jun 08 $27.00 calls are only selling for about $2.25, so will wait out this play a bit longer before making a final decision. I must give credit to my wife for this trade because it was her slight nudge and wink that provided the catalyst.

Just an update on a few of my posts earlier. As one can probably guess all my puts are slowly dissolving away and losing value as we close in on options expiration on 21 December. I have the Jan 15 calls on FLEX, but that's not looking too hot either. Additionally, the Dec 25 call I sold back in November on VDSI may be called away as well, which is okay because I still will be making a nice profit. I guess we will all see how this market really plays out after the fed announcement, which will be the guiding light going into 2008.

My First Options Trade

Well today I was full of apprehension because over this last weekend after the market took a drubbing, I decided to make my first options trade ever! I have been doing research and read a great book "Understanding Options" by Michael Sincere. It takes a very common sense approach to beginning options and is extremely user friendly. Anyway back to our regular programming. I have been following Vasco Data Security International INC (VDSI) for awhile and have even previously blogged about it being on my watch list.



On 25 October 2007, after doing my due diligence I finally picked up some shares on a pure momentum play and based on earnings at $30.02. The analysts were a bit disappointed with VASCO's earnings and valuations at the time, so the stock took an immediate tumble the very next day. Of course this sucked quite a bit and I was initially put off, but the more research I did the more I realized how this company has true worldwide exposure and are a true leader in their respective marketplace. I decided to hold on for the ride and watched it tumble down to the low 20's. On 8 November, I picked up more shares at $20.05 to shrink my cost basis realizing this was a great buying opportunity and that VASCO was being punished based on the overall marketplace not on the value of the company.

Now to the main point of my post. Today I took my first giant step into the options market by placing a covered call sale via my brokerage at Scottrade.

At first, I was a bit nervous thinking I was going to mess up my first options trade and end up costing myself a ton of cash. My main decision was what was my time frame and strike price for the covered call. I decided that since this was my first trade I did not want to space this trade out for many months, so I needed a strike price that if exercised would still allow me to earn a little profit. Based on my previous price points (mentioned earlier) I entered a sale for the December calls with a 25 strike price. My order was filled and I received a premium of $1.20. As you can see, I could have probably got a higher premium, but the NASDAQ started dropping this afternoon and I did not want to lose out on a trade just over a few bucks.



Lessons Learned: Don't get nervous it's just another trade, so it's not like I'm selling naked puts or calls where the risk is extremely great. All-in-all, I'm pretty happy with the trade and hope that the option does not get exercised because I still believe that VASCO will go higher just not sure if it will accomplish this in this volatile market by December. I guess I will have to wait and see.

On a more important note: A happy Veteran's Day from one veteran to the hundreds of thousands out there worldwide.

RIO Part Deux

Well in the interest in full disclosure I actually closed out my position in RIO on Halloween of all days. To be quite honest I put in a limit order that day way ahead of my projections and it popped at $38.25. What's weird is the high for the day was actually $38.29, so it just got in under the gun. I'm happy I was able to pull out a 14% profit in only 12-days, however I really really do like this stock and continue to be very bullish. I'm just waiting for this to drop to the low 30's and I will pile into this stock again. My other stocks that I have current sell orders for are: DELL at $38.00; VDSI at $36.10; OMCL at $30.02; and AFSI at $12.10. As you can probably tell from the current prices I'm bullish on the first three because my limit orders are well ahead of the current prices, however I am a bit concerned with AFSI, so I have put in a stop limit order for it. They are reporting earnings on 9 November, so I will wait and see and maybe there will be some upward action prior to earnings.