Commentaries

Buying Naked Puts

Richard Gallagher — Thu, 07 Mar 2013 20:31:12 GMT

No matter how bullish the stock market may look at a particular time, you should always diversify your portfolio with a few uncovered (or "naked") put purchases. In this report, we offer advice on how to pick the puts that are right for you.

A Refresher Course on Our Old Screener

Richard Gallagher — Mon, 11 Jun 2012 20:17:38 GMT

This week, we offer a refresher course on our Options Screener (Old Version). Since we introduced this product in early 2003, it has greatly enhanced the user-friendliness and flexibility of our service.

Understanding Our Volatility Forecasts

Marigo Rizzo — Mon, 02 Apr 2012 19:24:52 GMT

We are proud to say that we are the only options service available to retail investors that provides state-of-the art volatility forecasts on virtually the entire equity options market (2,500 + common stocks). These volatility forecasts are important, because they tell you whether an option is favorably priced for a particular strategy.

An Option Strategy on International Business Machines

Marigo Rizzo — Mon, 02 Apr 2012 19:26:36 GMT

This week’s spotlight for option opportunities looks at International Business Machines (IBM), whose earnings for 2011 are now estimated by Value Line analyst Theresa Brophy at $12.95 a share, which would be an increase of somewhat over 12%.

September Quarter Option Rank Performance - November 14, 2011

Ian Gendler — Mon, 14 Nov 2011 19:54:03 GMT

This week, we review the performance of our option and covered call ranks for our September quarter evaluation period, which ended 9/27/2011. This definitely was a good time to be “long volatility” (and, hopefully, to be a subscriber to our service).

Options on Xerox Corp (XRX)

Ian Gendler — Fri, 11 Nov 2011 18:43:19 GMT

This week, we kick off a new series of spotlights on option opportunities on individual stocks, starting with Xerox Corp (XRX). With the stock down 33% from end-June levels, and with a P/E ratio this is less than half the market’s, Xerox is steeply undervalued, according to our analysis. In looking at Xerox options, we see opportunities for covered call writes, cash-covered put writes, and outright longer-term call purchases.

A Suggested Hedge for Your Stock - September 9, 2011

Ian Gendler — Fri, 09 Sep 2011 15:13:32 GMT

This week, using calls on Intel Corporation (INTC) as examples, we show a suggested hedge for the underlying stock under current market conditions. Our model, finds some Intel options to be underpriced, and some others to be overpriced. You can get an edge by using these “mispricings” to your advantage when building a hedge.

Model Portfolio Update - September 9, 2011

Ian Gendler — Fri, 09 Sep 2011 15:05:09 GMT

With the recent sharp decline in the stock market, we need to roll 16 of the 20 short call positions in our portfolio to lower strike prices and/or to later expirations. The bad news, of course, is that the portfolio is down since quite a bit since we last rolled our positions (on 7/13/2011). The good news is that we are better off than the S&P 500 and the other benchmarks.

What’s Free (or Almost Free) from Commercial Web Sites

Ian Gendler — Fri, 12 Aug 2011 17:00:27 GMT

This week we are following up on our report of 3/03/2011, “What’s Free (or Almost Free) from the Exchanges,” with a review of the attractive free offers from commercial websites in the options business. Some of these sites offer free trials, while others allow you to register for free email newsletters. Often, the information offered at these sites can be used in conjunction with The Value Line Daily Options Survey to help you with your option trading and portfolio management.

10 Covered Call Myths (or “Myth Conceptions”)

Ian Gendler — Fri, 12 Aug 2011 16:50:10 GMT

Much of what you are told about covered call writing, even by many so-called “experts,” is wrong – or, at least, less than 100% accurate. This week, we explore ten myths about covered call writing that you may have heard. Perhaps the key word here is “always,” as in always explore your alternatives - rather than always pursue exactly the same strategy.

The Weekly Options Strategist - July 18, 2011

Ian Gendler — Mon, 18 Jul 2011 17:35:15 GMT

With summer approaching and premiums apparently still reasonable (despite the June 1st selloff), we thought it a good idea to revisit our Long/Long Hedge.

June Quarter Option Rank Performance

Ian Gendler — Wed, 13 Jul 2011 14:41:50 GMT

This week, we review the performance of our option and covered call ranks for our quarterly evaluation, period which ended 6/28/2011. As with the March quarter, our common ranks performed very well (i.e., showed perfect, or near-perfect, rank order). Additionally, our option model’s ability to differentiate between overpriced and underpriced options clearly added to the results of our option and covered call ranks.

Adding Options to Your Portfolio

Greg Brewer — Wed, 12 May 2010 15:57:27 GMT

The mere mention of options can send shivers down the spine of investors who have only heard about them through the news. To be sure, when used imprudently, options can do a great deal of damage to a portfolio. But, when used prudently, options can be a valuable addition to an investor’s toolbox. Covered calls are probably the best starting point for adding options to your portfolio.

Screening for Puts

Matthew Cottell — Mon, 28 Jan 2013 21:22:00 GMT

With implied volatilities having contracted by as much as 50% since March, and with stocks still up sharply from their lows, now may be the time to add more puts to your portfolio. This week, we screen for likely rank 1 puts to buy, looking for those that are based on rank 5 or 4 stocks (which also have a technical rank of 5 or 4) and which are underpriced according to our model. Our screening has come up with puts on Comtech (CMTL), DG FastChannel (DGIT), and US Bancorp (USB) among others.

A Sample Long Long Hedge

Matthew Cottell — Mon, 28 Jan 2013 21:46:37 GMT

There is a good chance that we may be in for some more volatility, at least for the next few months. If so, then the Long/Long Hedge, which consists of rank 1 call and rank 1 put purchases, promises to be a good bet. This week we review the performance of this hedge and present a sample of this hedge as a portfolio consisting of about $10,000 in call and put buys.

Updating Our Model Covered Call Portfolio

Matthew Cottell — Mon, 28 Jan 2013 21:19:52 GMT

Equities have been on a tear of late, with the broad-based Standard & Poor’s 500 Index up in seven of the past eight weeks. Growing evidence that the financial sector may not be as troubled as many had thought has certainly helped fuel the rally, as has recent data that suggest that the economic downward spiral is starting to level off. The question on the minds of many investors now is whether we’re at the early stages of another bull market or in a bear market that’s destined to re-test the March lows. Indeed, this is a critical question for us, too, since our expectations for the market determine which options we write in our Model Covered Call Portfolio; the portfolio contains five options that expire this month and another five that expire in June. (See figure 1 on page 4 for a snapshot of our portfolio at the close of trading on April 30th.)

Using Value Line Options for Your Covered Calls

Matthew Cottell — Mon, 28 Jan 2013 21:15:29 GMT

We believe that The Value Line Daily Options Survey offers the best tools in the business for the covered call investor. These tools include our unique set of covered call data, our covered call ranking system (our rank 1s have strongly outperformed the market), our daily top-200 Recommended Covered Calls, our flexible Option Screener and our Model Covered Call Portfolio. This week, we review these tools.

March 2009 Quarter Option and Covered Call Rank Performance

Ian Gendler — Wed, 21 Jul 2010 18:03:01 GMT

In as much as our rank order performance was mixed, the March 2009 quarter was hardly the best period for our option model. However, we can still point with pride to the fact that, in a difficult market environment, buyers of our rank 1 calls and puts scored substantial profits, and writers of our rank 1 covered calls beat the S&P 500 by 8.5%. We often stress that this is a market in which you definitely need to use options. And, we like to think that the Value Line Daily Options Survey offers invaluable tools for successful option investing.

What’s Free (or Almost Free) from Commercial Websites

Marketing Department — Wed, 03 Feb 2010 17:30:16 GMT

This week’s report is a follow-up to our February 2, 2009 report, “What’s free (or almost free) from the Exchanges” (Ot090202.Pdf). This time around, we review what you can get for free (sometimes on a trial basis) from various commercial websites. Before you go and spend big bucks on software, data or training, you should see what is available for free. Often, these sites offer services that can be used in conjunction with The Value Line Daily Options Survey to help you with your option trading and portfolio management.

Buying Protective Puts

Matthew Cottell — Mon, 28 Jan 2013 21:43:07 GMT

This is definitely a market in which you need to be hedged. The S&P 500 and the Dow are down about 11% over the past month and only about 2% above earlier January lows. On the other hand, some stocks are doing better than others. Value Line’s rank 1 common stocks are down only about 3.5% as investors are tentatively looking for growth potential. In what may be a “stock picker’s” market, holding good stocks and protecting them with puts may be the way to go. In this week’s report, we cover in some detail how to hedge stocks you own with puts. Even when markets are volatile (as they are now), you can tailor your put insurance to suit your expectations and your tolerance for risk.

What’s Free (or Almost Free) from the Exchanges?

Ian Gendler — Wed, 21 Jul 2010 18:07:13 GMT

One lesson from 2008 is clear: you are a lot better off if you know how to use options than if you don’t. One of the best ways to start leaning about options is to check out the various services offered by the option exchanges. Even experienced option investors should review the ever expanding list of training and information services offered by these organizations.

Defining Options Terms

Richard Gallagher — Fri, 11 Jun 2010 16:42:13 GMT

If you are already familiar with options (what they are, what gives them value, the terms that describe them and how they are traded), you can probably skip this chapter. However, if you are uncertain about some of the terms or concepts, this chapter will probably answer your questions. We start with some basic definitions.