Apple is poised for a potential explosive move

After reaching its peak at $700 late last year, Apple has plunged over 40% in the past 7-8 months to as low as $385. Judging by its price action in the past few months, I think Apple has seen its bottom and is accumulating energy for its next move. And I think Apple is ready for a potential explosive move to the upside in the later part of this year into next year. There is quite a strong bullish momentum behind Apple. I just list a few of them:

- Apple will soon introduce a cheaper model of iPhone for China and Indian. This will crash the competition from other smartphone companies and re-establish its dominating position in these two biggest smartphone markets.
- As indicated by Apple's CEO, Tim Cook at the latest earning call, a series of new products will be introduced later this year into next year. This may include iWatch, iTV, and iCAR.
- The sentiment for Apple has never been so depressed at the moment. This often occurs at the bottom for a stock.
- Technically though the price action of Apple stock is bullish and start to show an upward trend.
- Apple has an extremely cheap valuation, with a huge cash hoard.
- You can bet that Apple will grow its dividends substantially in the years to come

All these are bullish factors for Apple and I think the introduction of a new product will likely to be a catalyst for an explosive move. Take the opportunity to accumulate Apple shares and you won't be disappointed if you have a long-term investment timeframe for Apple.

Follow the lead of insiders

With so much downside already played out and so depressed sentiment resulted in, I’m wondering if now is a good time to start accumulate shares of mREITs such as NLY or AGNC. Well we have got some good indicator that indeed now it is the time. No one knows in advance when is the absolute bottom for any stock but there are some people who can very accurately tell whether a stock is at a good price to buy. Who has such kind of magic power? The insiders, especially those who really know the business insider and out!  These are the people at the top of the company such as CEO or board directors etc. Of course, they dare not tell anyone external when to buy their stocks but their behaviors sometimes may give you a pretty good idea what they are thinking now. Whey they sell their stocks, it’s not necessarily a sign that the stock share is too high. There are too good reasons that they may want to sell their shares: maybe they simply want to diversify or they urgently need money etc. But there is only one reason when they buy, especially when buy big: they are bullish about their business and stocks and think the stock is a good buy at that price. While there is no 100% sure thing and they also don’t know if it is the actual bottom, following their lead can substantially increase your chance of making money.  

Well, the President and CIO of AGNC just bought 25,000 shares at $22.44 (total value of $561K) (see here). This is not a small amount of money and I think it really tells you that he thinks the worst is likely over for their stocks and at this price, AGNC is cheap. Actually in the same link you will see the CEO of Hatteras (another mREIT) has also bought 12K shares of their stocks. I’m not sure we can get a better indicator than that and I think the worst for this sector is probably has been over. I will follow their lead and slowly accumulate the stock to enjoy an almost 20% yield.

For those who know options and don’t what to take much risks, there is a way to almost completely minimize your downside risk.  If you sell deep in the money calls for AGNC, you virtually lock in the 20% yield and at the same time being protected against the price decline of the stock. Of course, this way you are only getting the income from the 20% yield (not bad at all in any sense) but you will not get any capital gain if the stock starts to move up in price. Personally I would not do so at the moment, considering this is likely at the bottom of the stock. I hope to enjoy both the 20% income and the capital gain as well by taking some risks.

Another winning income trade with IBM

First of all, thanks those who wrote to me with the interest of learning the powerful income trading strategy. Regardless of whether you know options or not, you certainly can master the technique as long as you want to learn. We are already well on the way in the learning process for some and I'm sure very soon they will see the fruits! Sorry for those I cannot immediately start to work with due to my limited capacity but we will get there. I simply put you on the waiting list for now. Thanks for your understanding!

The IBM trade I talked about 10 days ago come to the end today. Interestingly IBM followed exactly the footsteps of MSFT to close above the strike price of $195 at the very last second! IBM actually plunged during the day to as low as $193.22 but again people saw the value of it and had bidden it up. Simply amazing! So all the 3 tradings I wrote about within the last 10 days were winners and if you had got in as I suggested, you would have made quick money 100% for all the three. That's the power of this technique!

Facebook becomes interesting now

I was very bearish about Facebook (FB) since its IPO and watched its price to plunged over 40% below $20 back in Aug 2012. But now I'm kind of changing my mind and think FB starts to become interesting now. Why? Well, when facts change, I change my mind as well.

Last week, FB reported its earnings, which blew away the estimates by a wide margin. What happened to FB that has made it suddenly rise? Long story short, it has totally redirect its strategy by focusing more on the mobile business now. Last year FB bet heavily in its mobile application. As a result, the amount of mobile users were expanding by 51% over the last year and the company has gained roughly 41% of its revenue through mobile advertising. The FB stock jumped 30% with its impressive earnings. But don't get me wrong. FB is still an extremely expensive stock. I suspect that this hyped sentiment was a bit overreaction and likely short lived. When it cools down, the stock price will likely recede as well. But if FB comes back to below $30, I think it could be a good speculation entry point. Although it is still unbelievably expensive, the market is not always rational. It likes companies with great potential in growth. The new FB probably fits into this kind of market mentality, which will push its price to even more unreasonable level before coming back to reality. If you like speculation, FB may be a good choice. But don't jump into it too soon and watch your position size!

Two quick wins for a nice income within days

So, it is Friday, the expiring date for the 2 options I posted a few days ago.

First the APPL Jul 26 $410 puts I wrote on Wed. If you sold/wrote these puts, you hoped that APPL would stay above $410 so that you would get all the money for free. This is exactly happening today. APPL closed at around $440 and these puts expired worthless (to the benefit of put-writing). So indeed within 3 days, you would get over $600 for free, if you did manage to sell them 3 days ago.

Now the MSFT Jul 26 $35.50 puts. Well I thought MSFT would close below $35.50 today and one had to buy MSFT at this strike price (called "being put"), since almost all day long MSFT was changing hands below $35.50. But miraculously at the last few minutes, MSFT was pushed up through and closed at $35.62. So another $120 clean and free money within days if you have sold this put early this week. This happens quite often with good companies at a good valuation that they simply refuse to go down much further. These are the good candidates for such trading.

 
For the IBM Aug 2 $195 puts, it is still too early to know the result but its price action is moving in the right direction as it is trading above $195 now. We will see the final result next Friday when the puts expire.

I understand not many people understand what I’m talking about here. But I want to post these real world examples here for future reference, since I’m putting together an idea for a FREE training of this powerful technique for my friends who are interested in. Stay tune and I will post it shortly.

Fast money with APPL within 3 days

Apple (APPL) reported good earnings after the hours and the market loved what they heard. APPL shares are moving up after hours (around $440) and likely it will be trading high tomorrow. I really like APPL valuation at this price, which is very cheap. So I think there is a great opportunity to make some quick money (income) by writing APPL naked puts. Here is the one I think one can reasonablly expect to make money from within 3 days. APPL Jul 26 $410 put is closed at $6.44 per share today. It expires in 3 days on Friday this week. As long as APPL stay above $410 at Friday's closing, the put will expire worthless and the naked put writers will get the money full and clean, about $644 per contract (100 shares). If APPL drops below $410 on Friday, then one has to buy APPL but with a price equivalent to $403.56 per share. This is a big discount from its current price and I will be happy to own APPL at this price.

AAPL 26 Jul 2013 $410.000 put (AAPL130726P00410000)

6.44 2.64(69.47%) 

Quick income ideas on MSFT & IBM

Just quick thoughts on two stocks' options, which I may use for future reference for something I'm working on.

I think MSFT has shown good valuation at the current price (closed at $32 today) and if you know how to write naked puts, you may make a quick $120 within days (by Friday this week) per 10 contracts. Here is the quote today for this put, expired on Jul 26 (Friday). If MSFT stays at or above $31.50 at close this Friday,  the puts will be worthless, i.e. those writing the naked puts will get the full profits at around $120 per 10 contract. Let's see on Friday. Otherwise, you can buy this already depressed MSFT at a more discount price at around $31.38 (another 2% discount from its current price)

MSFT Jul 26 '13 $31.50 Put

Bid (Size) 0.12 (100)	Ask (Size) 0.13 (975)

The other stock is IBM. Again a great value stock at this price (closed at $194 today). If you write its naked puts at $195 expired on Friday next week (Aug 2), you either get free money for about $260 per contract (100 shares) in 10 days if IBM goes above $195 at closing on Aug 2 or get to buy IBM at a discount around $192.4. IBM Aug 02 '13 $195 Put Bid (Size) 2.62 (31)    Ask (Size)    2.70 (40) Closing Price 7/22/13 3:33:00 PM ET