Common Cents purchased a November 20 $90 call option for $6.80 as RH's share price declined to near $92.50 on a market-wide pullback. Common Cents will look to sell this option at a minimum of $7.50, which will require RH's share price to increase by up to 5.5% by November 20.
RH continues to report good earnings growth, and recent developments in the market do not indicate that RH's future prospects have decreased. Therefore, Common Cents maintains that RH is still an attractive buy, particularly at the low $90's.
Tuesday, September 29, 2015
CLNE: Expiration of September 20 Call Option
Common Cents' CLNE $6 September 20 Call Option expired...worthless! This call option was a mistake upon a mistake. It was purchased with little analysis performed other than hope for an increase in CLNE share price. Lesson learned...hopefully.
Common Cents is continuing to test the use of options in its portfolio, to dismal performance so far. CC will continue to develop an options strategy; however, it has not yet been determined that options investing will enhance portfolio returns on a consistent basis.
Common Cents is continuing to test the use of options in its portfolio, to dismal performance so far. CC will continue to develop an options strategy; however, it has not yet been determined that options investing will enhance portfolio returns on a consistent basis.
Wednesday, September 16, 2015
YTD Performance Update: September 2015
YTD performance (as of 8/31/15): -4.28%
S&P performance (as of 8/31/15): -2.88%
Common Cents Portfolio is down by 1.40%!!
Portfolio Composition by Position:
S&P performance (as of 8/31/15): -2.88%
Common Cents Portfolio is down by 1.40%!!
Portfolio Composition by Position:
AAPL: 14%
V: 11%
LUV: 9%
RH: 9%
BP: 8%
T: 5%
CLNE: 4%
HD: 3%
HZNP: 3%
GLD: 3%
CASH: 31%Portfolio Composition by Sector/Industry (excluding cash):
Energy: 19%
Technology: 19%
Retail: 18%
Financial Services: 17%
Industrials: 14%
Communication Services: 8%
Healthcare: 4%
Friday, September 11, 2015
RH: Sale @ "$99"
Common Cents sold its November 20 $90 call option as RH's share price increased due its quarterly earnings release. The options, which were purchased for $7, were sold for $9. Common Cents earned a return of 78% versus an approximate 5% increase in RH's share price. Bingo!
Going forward, Common Cents will look to sell some shares of RH if the share price increases to near $105. Further purchases of options will likely be suspended until after the fed interest rate decision in mid September.
Going forward, Common Cents will look to sell some shares of RH if the share price increases to near $105. Further purchases of options will likely be suspended until after the fed interest rate decision in mid September.
Friday, September 4, 2015
RH: Purchase @ "$97"
Common Cents purchased a November 20 $90 call option for $7.00. Common Cents will look to sell this option at a minimum of $8.00, which will require RH's share price to increase by up to 8.9% by November 20.
RH will release its quarterly earnings on September 10. As stated in a previous RH post, RH has typically increased in share price after these earnings release while gradually decreasing afterward. Any slowdown in product sales due to a West Coast Port slowdown was likely accounted for by analysts, who lowered estimates after the last quarterly release due to this issue. Therefore, it is likely that RH's share price "pop" after its earnings release will occur for the next release.
A risk to this trade is the fear of a possible Fed interest rate hike in mid September. This may cause an initial downturn in the stock market; however, I think the hike, if it actually occurs, will be forgotten a month or so afterward. In addition, the lack of a rate hike may cause a short-term boost in the markets.
Common Cents Take: RH has a high likelihood of overachieving for the quarterly earnings release on September 10. Some short-term headwinds exist that may keep RH's share price down; however, RH's actual business is generally not affected by the headwinds.
RH will release its quarterly earnings on September 10. As stated in a previous RH post, RH has typically increased in share price after these earnings release while gradually decreasing afterward. Any slowdown in product sales due to a West Coast Port slowdown was likely accounted for by analysts, who lowered estimates after the last quarterly release due to this issue. Therefore, it is likely that RH's share price "pop" after its earnings release will occur for the next release.
A risk to this trade is the fear of a possible Fed interest rate hike in mid September. This may cause an initial downturn in the stock market; however, I think the hike, if it actually occurs, will be forgotten a month or so afterward. In addition, the lack of a rate hike may cause a short-term boost in the markets.
Common Cents Take: RH has a high likelihood of overachieving for the quarterly earnings release on September 10. Some short-term headwinds exist that may keep RH's share price down; however, RH's actual business is generally not affected by the headwinds.
RH: Sale @ "$99.3"
Common Cents sold its November 20 $90 call option on Thursday, September 3, as the share price of RH neared $95. Common Cents achieved a 27% return on its investment versus a 3.8% increase in RH's share price.
Since the sale, RH's share price has reduced to $91 - $92. I am considering making a similar trade before the earnings release on September 10; however, chatter about a fed interest rate hike in mid September may create some short-term headwinds for the market as a whole. This factor is important to consider when deciding on adding the risk of options.
Since the sale, RH's share price has reduced to $91 - $92. I am considering making a similar trade before the earnings release on September 10; however, chatter about a fed interest rate hike in mid September may create some short-term headwinds for the market as a whole. This factor is important to consider when deciding on adding the risk of options.
Wednesday, September 2, 2015
RH: Purchase @ "$97.3"
Common Cents purchased November 20 2015 call options with a strike price of 90 for $7.30. The options were purchased when RH's share price neared $91.50. Going forward, Common Cents plans to sell the options for at least a 10% profit (~$8.00). For this to happen, RH's share price will need to increase by up to 8.7%.
RH's stock has declined quite a bit recently due to the marketwide decline and, in part, due to an unpleasant forecast of future earnings by Williams Sonoma during its recent quarterly report. As far as the marketwide decline, much of it is due to declining oil prices and fears over a slowing Chinese economy. Declining oil prices are, at a minimum, neutral for RH. Any decline in fuel prices increases the funds available to spend at RH stores; however, I believe that most of RH's customers are in the affluent category and are not overly affected by oil prices.
The fears of a slowing Chinese economy does not have a direct affect on the US economy, (All of RH's stores are located in the US). A much more significant economic slowdown in China may creep over to the US economy (and elsewhere) eventually, but we are nowhere near that severity at this moment.
RH reports earnings on September 10. The stock usually spikes on the positive earnings reports, and analysts have decreased earnings estimates since the last report. Therefore, RH is prime to overachieve the lowered expectations on this next earnings call, barring a surprisingly large effect of port slowdowns on the supply chain.
Common Cents Take: RH's share price has decreased substantially due to market volatility on factors that have little to do with RH's business. Thus, the low $90's are attractive prices to purchase RH shares.
RH's stock has declined quite a bit recently due to the marketwide decline and, in part, due to an unpleasant forecast of future earnings by Williams Sonoma during its recent quarterly report. As far as the marketwide decline, much of it is due to declining oil prices and fears over a slowing Chinese economy. Declining oil prices are, at a minimum, neutral for RH. Any decline in fuel prices increases the funds available to spend at RH stores; however, I believe that most of RH's customers are in the affluent category and are not overly affected by oil prices.
The fears of a slowing Chinese economy does not have a direct affect on the US economy, (All of RH's stores are located in the US). A much more significant economic slowdown in China may creep over to the US economy (and elsewhere) eventually, but we are nowhere near that severity at this moment.
RH reports earnings on September 10. The stock usually spikes on the positive earnings reports, and analysts have decreased earnings estimates since the last report. Therefore, RH is prime to overachieve the lowered expectations on this next earnings call, barring a surprisingly large effect of port slowdowns on the supply chain.
Common Cents Take: RH's share price has decreased substantially due to market volatility on factors that have little to do with RH's business. Thus, the low $90's are attractive prices to purchase RH shares.
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