Daily Stock Market Equity and Options Trading Commentary

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Thursday, July 23, 2009

Earnings Watch Thursday July 23, 2009

There are some more big names reporting earnings today. The stocks I am most interested in are Ford Motor (NYSE:F), Amazon (NASDAQ:AMZN), and American Express (NYSE:AXP). I am curious how the American automaker will report earnings for the quarter where it's biggest U.S. competitor (General Motors, old ticker NYSE:GM) filed for chapter 11 bankruptcy. I have a feeling Amazon will have another great quarter due to strong sales of the Kindle Electronic Book Reader. I am not too concerned about whether American Express trumps earnings or not, but I'm more anxiously awaiting the outlook on business spending the management team over at American Express is going to give - this is a great economic indicator. The stocks I'll be keeping a close eye on are listed below.
  • 3M Co (MMM)
  • Amazon.Com Inc. (AMZN)
  • American Express Company (AXP)
  • Ford Motor Co (F)
  • Potash Corp Sask Inc (POT)
  • Terra Industries Incorporate (TRA)

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SBL said...

I've got to get serious about this. How do you find these things out? I see Ford is over $7 today. Nice gain I missed. :(

I also missed the jump on SOMX, I was foolshly waiting for it to go down to $1 so I could buy it and then get some upside. Well I missed the upside big time today.

How could I have used options in this way? Could I have bought a call to guarantee my right to buy at $1, and then when the stock shot up to $4, I could have redeemed my option, bought the stock for $1 and then sold it at $4? I would have to buy 100 shares at a time. And if the stock did not increase, i would just let my option expire and only lose the price I paid for the option? Is that how it works?

Option Maestro said...

I use Yahoo or Google Finance to see when these companies are reporting, I am sure your brokerage has this info as well. As for options, yes you would only lose the premium you paid for the option. Buying calls is a very risky strategy! You pay a premium for the rights to the stock at $1, if it rockets you make money, if it falls below $1 you lose 100% of your investment (premium) and don't even get the stock at expiration.

SBL said...

but what about the risk of buying the stock and then having it lose value? then you've lost money that way too. I'm looking at spending $1,000 to buy shares. So I'd have to weight the cost of the option, plus the brokage fee (approx $10), to determine if I want to risk losing that, or risk losing dollars in the stock... Am I thinking about it right, or is there something I don't see?

Option Maestro said...

Yes you could lose on both, the likelihood of losing 100% of your stock investment however is much lower. Have you looked at using option buy/write strategies?

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