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FAST - Called Away
Paul,

I think FAST is a terrific "earning season and option trading" case study. I sold calls on my long held position with two things in mind: 1) make extra "dividends" and 2) 80% of calls expire worthless. I also need to take the profits so if I got called away, I good with it the action.

Well, got called away today on 300 shares of my 400 on FAST a week before expiration - I AM THE 20%, I AM THE 20%!!!

Earning report yesterday caused a 10% spike in price and it is trailing down as reality sets in on the traders. I expect the stock to continue to erode to the end of the year and apparently have at least one person who agreed.

Made money... happy.

Malcolm
Malcolm

Glad to hear you are happy with the result on FAST.

I interpreted the FAST earnings report yesterday a bit differently. Sales continued to rise at about 12% as they have for most of this year and EPS slightly faster. Thus good company growth in the slow growth US economy indicating they are taking market share from someone. I think FAST is recognized to be a well managed company in a tough industry that is cyclical and the key question is what PE multiple or price is this company a buy or sell?

I do agree that with 2012 EPS expected to be $1.44 and 2013 1.67, an increase of 15.9%, this indicates a current PE of 31.2 and a future PE of 26.9 both quite high levels for a growth stock in a cyclical industry.

Yesterday the FAST PnF chart shown at

http://stockcharts.com/def/servlet/SC.pnf?chart=fast,PLTCDANRBO[PA!B20][D][F1!3!!!2!20]&pref=G

indicated a technical breakout from a quadruple top suggesting an upside move to $58. Based upon fundamentals I have FAST as a sell at 58.12 and thus I tend to see some upside move more likely through year end as opposed to a decline.

It will be interesting to see what happens.

Dan



On 10/12/2012 12:01 PM, Malcolm Myles wrote:
Paul,

I think FAST is a terrific "earning season and option trading" case study. I sold calls on my long held position with two things in mind: 1) make extra "dividends" and 2) 80% of calls expire worthless. I also need to take the profits so if I got called away, I good with it the action.

Well, got called away today on 300 shares of my 400 on FAST a week before expiration - I AM THE 20%, I AM THE 20%!!!

Earning report yesterday caused a 10% spike in price and it is trailing down as reality sets in on the traders. I expect the stock to continue to erode to the end of the year and apparently have at least one person who agreed.

Made money... happy.

Malcolm


Very interesting.  My understanding is that it's highly unusual (and in theory, never optimal) for a call holder to exercise early except possibly on the day before an ex-dividend date.
 
-Jim Thomas
----- Original Message -----
Sent: Friday, October 12, 2012 9:01 AM
Subject: [cool_club] FAST - Called Away

Paul,

I think FAST is a terrific "earning season and option trading" case study. I sold calls on my long held position with two things in mind: 1) make extra "dividends" and 2) 80% of calls expire worthless.  I also need to take the profits so if I got called away, I good with it the action.

Well, got called away today on 300 shares of my 400 on FAST a week before expiration -  I AM THE 20%, I AM THE 20%!!!

Earning report yesterday caused a 10% spike in price and it is trailing down as reality sets in on the traders.  I expect the stock to continue to erode to the end of the year and apparently have at least one person who agreed.

Made money... happy.

Malcolm
I better do this right.

To recap with detail previously not provided...

I have 600 shares of FAST with a cost basis of $8.24 - I've had the shares for some time. I have a large write off coming and wanted to sell the shares so that I could use the loss to offset any gains. Any remainder would be taxed at this years rate, which I find advantageous to do because of the discord in DC.

I have always thought about Covered Options as a technique I should learn and use, so I asked my broker, set up my account and then proceeded to write a covered call. I knew only what I had picked up in an investment club and my discussion with my broker.

My first trade Aug 20th:
STO 6x 11/17/12 44.00 C @ 2.23, net $1,324.47
If exercised, I would be collecting: share price + premium - costs = $27,724 and change. If I sold outright at the time, I would have gotten $26,000 ball park.

It was a "seeing eye single" - if found money without my knowing how. I then started with the COOL Tools and subsequently learned that it was a "seeing eye double or triple". APR was 58% at $1,324.

Time passed and I learned... boy howdy. I made two errors: 1) I wrote out the call too far out, and 2) I wrote the call past an earnings date (10/11/2012). Both party fouls.

However, I also learned I could buy the option back which I did when the price dropped.

Second trade Sep 13th:
BTC 6x 11/17/12 44.00 C @ 1.25, at $762, netting an APR of 27% and $562 for the completed trade.

My third mistake. I should have waited until the price got lower, which it did, and use the COOL Tool to analyze a better return. However, I still had my 600 shares, and now $562 cash in the account. Learned three valuable lessons, found COOL Tools and got paid to do it!

I still need to liquidate the position - I'm an investor. The difference between an investor and a trader is one sell order. I don't sell well which makes me an investor. This is one reason I thought covered options may be of benefit to me - I set my price, the month I want to sell, write the call and walk away.

So I made my fourth mistake, Sep 13th:
STO 6x 10/20/2012 41.00 C at $2.70 for a net of $1,620.

Why? I am not ashamed to admit, I wanted to see if I would get taken some where in the 43-44 range as my sell price by COOL Tool was $43.66 with premiums if I got assigned, and $1,620 is real nice incentive. I was very comfortable with $43.66 when I wrote the call thinking the price would bobble around this area for a while...

So I accomplished my goal: a painless way to sell a long held stock position. Why was it a mistake? Well, I think it was because I wrote the call too far away from the earnings release to get the maximum premium for the price I was comfortable with (41) AND I wrote the call too close to the earnings release so I didn't have enough sense to set a price in relationship to the expected activity prior and shortly after the earnings release (41). Earnings came out Thursday and the stock rocketed 10% - buy the rumor, sell the fact right... wrong. Stock hit 46+ and then began to drift lower.

Today I had 300 shares (half my position) called away at $41.00 a share. Money in the bank baby and $32.76 per share just because I stayed alive all this time... sweet with a $810 cash cherry!

As for why I got called away a week before expiration? Jim T, I think it is because Nouriel Roubini buys calls by the truck load and saw a quick $4.20+/- profit on an over active stock with a great account statement. When markets are made and broken on fractions of a cent in fractions of second, I can't be surprised when someone stoops down and picks up $4.

My long term outlook for FAST? Love this company. Smart, making money, great dividend player if not an expensive growth potential. In five years, I'll still own shares in this company. I agree with Dan H's assessment (but Dan, it was all that and a bag of chips last quarter but the price never broke 50?) but with all the negative energy out there right now, I believe the stock price will, without merit, trend down as the construction season moves south for the winter, stimulus evaporates as projects finish up, Euro, etc, etc, etc... (did you just read the etc with Yule Brenners voice? I did typing it.)

Now that I have rolled out the profits on my shares and Uncle Sam is boned because of my offset, I'm going to write cash secured puts and put on some more shares.

Education while getting paid? Who would have thought it possible in a dog eat dog economy?!

Disclaimer: I reserve the right to be totally wrong and expect the universe to clearly, succinctly either prove my work true or provide me with corrections if my work is false. Either way - did you see that $810 just for clicking a mouse with minimum level of intellect? Huzzah!

Disclaimer 2: do you own work! etc, etc, etc...


Malcolm



On 10/12/2012 9:01 AM, Malcolm Myles wrote:
Paul,

I think FAST is a terrific "earning season and option trading" case study. I sold calls on my long held position with two things in mind: 1) make extra "dividends" and 2) 80% of calls expire worthless. I also need to take the profits so if I got called away, I good with it the action.

Well, got called away today on 300 shares of my 400 on FAST a week before expiration - I AM THE 20%, I AM THE 20%!!!

Earning report yesterday caused a 10% spike in price and it is trailing down as reality sets in on the traders. I expect the stock to continue to erode to the end of the year and apparently have at least one person who agreed.

Made money... happy.

Malcolm

WooHoo... I love giving money more than making it!

Boxers and Buddies, Wylie Animal Rescue and Northern Nevada Bulldog Rescue just got an unexpected and apparently much appreciated donations! Well, lets see if lightening strikes twice.

Malcolm

On 10/12/2012 6:47 PM, Malcolm Myles wrote:
I better do this right.

To recap with detail previously not provided...

I have 600 shares of FAST with a cost basis of $8.24 - I've had the shares for some time. I have a large write off coming and wanted to sell the shares so that I could use the loss to offset any gains. Any remainder would be taxed at this years rate, which I find advantageous to do because of the discord in DC.

I have always thought about Covered Options as a technique I should learn and use, so I asked my broker, set up my account and then proceeded to write a covered call. I knew only what I had picked up in an investment club and my discussion with my broker.

My first trade Aug 20th:
STO 6x 11/17/12 44.00 C @ 2.23, net $1,324.47
If exercised, I would be collecting: share price + premium - costs = $27,724 and change. If I sold outright at the time, I would have gotten $26,000 ball park.

It was a "seeing eye single" - if found money without my knowing how. I then started with the COOL Tools and subsequently learned that it was a "seeing eye double or triple". APR was 58% at $1,324.

Time passed and I learned... boy howdy. I made two errors: 1) I wrote out the call too far out, and 2) I wrote the call past an earnings date (10/11/2012). Both party fouls.

However, I also learned I could buy the option back which I did when the price dropped.

Second trade Sep 13th:
BTC 6x 11/17/12 44.00 C @ 1.25, at $762, netting an APR of 27% and $562 for the completed trade.

My third mistake. I should have waited until the price got lower, which it did, and use the COOL Tool to analyze a better return. However, I still had my 600 shares, and now $562 cash in the account. Learned three valuable lessons, found COOL Tools and got paid to do it!

I still need to liquidate the position - I'm an investor. The difference between an investor and a trader is one sell order. I don't sell well which makes me an investor. This is one reason I thought covered options may be of benefit to me - I set my price, the month I want to sell, write the call and walk away.

So I made my fourth mistake, Sep 13th:
STO 6x 10/20/2012 41.00 C at $2.70 for a net of $1,620.

Why? I am not ashamed to admit, I wanted to see if I would get taken some where in the 43-44 range as my sell price by COOL Tool was $43.66 with premiums if I got assigned, and $1,620 is real nice incentive. I was very comfortable with $43.66 when I wrote the call thinking the price would bobble around this area for a while...

So I accomplished my goal: a painless way to sell a long held stock position. Why was it a mistake? Well, I think it was because I wrote the call too far away from the earnings release to get the maximum premium for the price I was comfortable with (41) AND I wrote the call too close to the earnings release so I didn't have enough sense to set a price in relationship to the expected activity prior and shortly after the earnings release (41). Earnings came out Thursday and the stock rocketed 10% - buy the rumor, sell the fact right... wrong. Stock hit 46+ and then began to drift lower.

Today I had 300 shares (half my position) called away at $41.00 a share. Money in the bank baby and $32.76 per share just because I stayed alive all this time... sweet with a $810 cash cherry!

As for why I got called away a week before expiration? Jim T, I think it is because Nouriel Roubini buys calls by the truck load and saw a quick $4.20+/- profit on an over active stock with a great account statement. When markets are made and broken on fractions of a cent in fractions of second, I can't be surprised when someone stoops down and picks up $4.

My long term outlook for FAST? Love this company. Smart, making money, great dividend player if not an expensive growth potential. In five years, I'll still own shares in this company. I agree with Dan H's assessment (but Dan, it was all that and a bag of chips last quarter but the price never broke 50?) but with all the negative energy out there right now, I believe the stock price will, without merit, trend down as the construction season moves south for the winter, stimulus evaporates as projects finish up, Euro, etc, etc, etc... (did you just read the etc with Yule Brenners voice? I did typing it.)

Now that I have rolled out the profits on my shares and Uncle Sam is boned because of my offset, I'm going to write cash secured puts and put on some more shares.

Education while getting paid? Who would have thought it possible in a dog eat dog economy?!

Disclaimer: I reserve the right to be totally wrong and expect the universe to clearly, succinctly either prove my work true or provide me with corrections if my work is false. Either way - did you see that $810 just for clicking a mouse with minimum level of intellect? Huzzah!

Disclaimer 2: do you own work! etc, etc, etc...


Malcolm



On 10/12/2012 9:01 AM, Malcolm Myles wrote:
Paul,

I think FAST is a terrific "earning season and option trading" case study. I sold calls on my long held position with two things in mind: 1) make extra "dividends" and 2) 80% of calls expire worthless. I also need to take the profits so if I got called away, I good with it the action.

Well, got called away today on 300 shares of my 400 on FAST a week before expiration - I AM THE 20%, I AM THE 20%!!!

Earning report yesterday caused a 10% spike in price and it is trailing down as reality sets in on the traders. I expect the stock to continue to erode to the end of the year and apparently have at least one person who agreed.

Made money... happy.

Malcolm


Malcolm,
Thanks so very much for sharing your experiences with FAST.  I appreciate getting to understand the entire thought process behind trades. It's a great learning tool for all of us!
Theresa

On Oct 12, 2012, at 9:47 PM, Malcolm Myles wrote:

I better do this right.

To recap with detail previously not provided...

I have 600 shares of FAST with a cost basis of $8.24 - I've had the shares for some time.  I have a large write off coming and wanted to sell the shares so that I could use the loss to offset any gains.  Any remainder would be taxed at this years rate, which I find advantageous to do because of the discord in DC.

I have always thought about Covered Options as a technique I should learn and use, so I asked my broker, set up my account and then proceeded to write a covered call.  I knew only what I had picked up in an investment club and my discussion with my broker.

My first trade Aug 20th:
    STO 6x 11/17/12 44.00 C @ 2.23, net $1,324.47
    If exercised, I would be collecting:  share price + premium - costs = $27,724 and change.  If I sold outright at the time, I would have gotten $26,000 ball park.

It was a "seeing eye single" - if found money without my knowing how.  I then started with the COOL Tools and subsequently learned that it was a "seeing eye double or triple".  APR was 58% at $1,324.

Time passed and I learned... boy howdy.  I made two errors:  1) I wrote out the call too far out, and 2) I wrote the call past an earnings date (10/11/2012).  Both party fouls.

However, I also learned I could buy the option back which I did when the price dropped.

Second trade Sep 13th:
    BTC 6x 11/17/12 44.00 C @ 1.25, at $762, netting an APR of 27% and $562 for the completed trade.

My third mistake.  I should have waited until the price got lower, which it did, and use the COOL Tool to analyze a better return.  However, I still had my 600 shares, and now $562 cash in the account. Learned three valuable lessons, found COOL Tools and got paid to do it!

I still need to liquidate the position - I'm an investor.  The difference between an investor and a trader is one sell order.  I don't sell well which makes me an investor.  This is one reason I thought covered options may be of benefit to me - I set my price, the month I want to sell, write the call and walk away.

So I made my fourth mistake, Sep 13th:
    STO 6x 10/20/2012 41.00 C at $2.70 for a net of $1,620.

Why? I am not ashamed to admit, I wanted to see if I would get taken some where in the 43-44 range as my sell price by COOL Tool was $43.66 with premiums if I got assigned, and $1,620 is real nice incentive.  I was very comfortable with $43.66 when I wrote the call thinking the price would bobble around this area for a while... 

So I accomplished my goal: a painless way to sell a long held stock position.  Why was it a mistake?  Well, I think it was because I wrote the call too far away from the earnings release to get the maximum premium for the price I was comfortable with (41) AND I wrote the call too close to the earnings release so I didn't have enough sense to set a price in relationship to the expected activity prior and shortly after the earnings release (41).  Earnings came out Thursday and the stock rocketed 10% - buy the rumor, sell the fact right... wrong.  Stock hit 46+ and then began to drift lower.

Today I had 300 shares (half my position) called away at $41.00 a share.  Money in the bank baby and $32.76 per share just because I stayed alive all this time... sweet with a $810 cash cherry!

As for why I got called away a week before expiration?  Jim T, I think it is because Nouriel Roubini buys calls by the truck load and saw a quick $4.20+/- profit on an over active stock with a great account statement.  When markets are made and broken on fractions of a cent in fractions of second, I can't be surprised when someone stoops down and picks up $4.

My long term outlook for FAST?  Love this company.  Smart, making money, great dividend player if not an expensive growth potential.  In five years, I'll still own shares in this company.  I agree with Dan H's assessment (but Dan, it was all that and a bag of chips last quarter but the price never broke 50?) but with all the negative energy out there right now, I believe the stock price will, without merit, trend down as the construction season moves south for the winter, stimulus evaporates as projects finish up, Euro, etc, etc, etc... (did you just read the etc with Yule Brenners voice? I did typing it.)

Now that I have rolled out the profits on my shares and Uncle Sam is boned because of my offset, I'm going to write cash secured puts and put on some more shares.

Education while getting paid?  Who would have thought it possible in a dog eat dog economy?!

Disclaimer: I reserve the right to be totally wrong and expect the universe to clearly, succinctly either prove my work true or provide me with corrections if my work is false.  Either way - did you see that $810 just for clicking a mouse with minimum level of intellect?  Huzzah!

Disclaimer 2: do you own work! etc, etc, etc...


Malcolm



On 10/12/2012 9:01 AM, Malcolm Myles wrote:
Paul,

I think FAST is a terrific "earning season and option trading" case study. I sold calls on my long held position with two things in mind: 1) make extra "dividends" and 2) 80% of calls expire worthless.  I also need to take the profits so if I got called away, I good with it the action.

Well, got called away today on 300 shares of my 400 on FAST a week before expiration -  I AM THE 20%, I AM THE 20%!!!

Earning report yesterday caused a 10% spike in price and it is trailing down as reality sets in on the traders.  I expect the stock to continue to erode to the end of the year and apparently have at least one person who agreed.

Made money... happy.

Malcolm