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| Bullish |
INSP
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Stock Option Trading Strategy
Buy back month call options
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Stock Option Trade
Buy 5 INSP July $10 calls (INSP 10G10.00) @ $1.40 - Day. This stock is strong and it wants to move higher. this is a long term position. We will scale in and buy more over time.
Buy 5 INSP July $10 calls @ $2.20 - Day. filled 3/9/10
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Stock Option Target
None
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Stock Option Stop
None
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Stock Description
InfoSpace, Inc. develops search tools and technologies that assist consumers with finding content and information on the Internet. It offers search services that enable Internet users to locate and view content, information, merchants, individuals, and products online.
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Option Trade Rationale
Last week, the company said that revenues for the fourth quarter of 2009 were $70.5 million, reflecting a $33.7 million, or 92%, increase from the fourth quarter of 2008. Revenues for the year were $207.6 million in 2009, reflecting a $50.9 million, or 32%, increase over 2008.
Net income for the fourth quarter of 2009 was $10.1 million, or $0.28 per diluted share, compared to net loss of $7.9 million, or $0.23 per share, for the fourth quarter of 2008. Net income for the fourth quarter includes tax benefits of $5.7 million which includes a $3.3 million one-time tax benefit from a net business tax refund. Net income for 2009 was $9.8 million, or $0.28 per diluted share, compared to net loss of $18.7 million, or $0.54 per share, for 2008.
Cash, cash equivalents, and marketable securities totaled $226.4 million as of December 31, 2009. At the end of the year, the Company had no debt obligations.
The stock trades at a forward P/E of 17.
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Trading Game Plan
“InfoSpace delivered another strong quarter, capping a year of solid growth and profitability," said Will Lansing, president and chief executive officer of InfoSpace. "Much of our success in the quarter and in 2009 was due to the strength of our distribution business and our ongoing efforts to improve operating efficiencies. In addition, we continued to invest in new initiatives in our owned and distributed search products, as well as in initiatives beyond search.”
For the first quarter of 2010, the Company expects revenue to be between $60 million and $65 million. The Company expects Adjusted EBITDA to be between $6 million and $7 million and net income to be between $0.5 million and $1.5 million, or $0.01 and $0.04 per diluted share.
The company has great earnings and revenue growth and the balance sheet is rock solid. Current Assets exceed Total Liabilities by $5.70/share!!.
The stock has held up well during the recent market sell off and it wants to move higher. Support at the breakout held and buyers are stepping up.
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Stock Option Track Record
2/8/10 - Bought 5 INSP July $10 calls (INSP 10G10.00) @ $1.40.
3/9/10 - Bought 5 INSP July $10 calls (INSP 10G10.00) @ $2.20
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| Bearish |
HBC
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Stock Option Trading Strategy
Buy put options
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Stock Option Trade
Buy 10 HBC March $50 puts (HBC 10O50.00) @ $2.30 - Day. Please note the new option symbology. All options are in this format now. filled 2/08/10
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Stock Option Target
None
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Stock Option Stop
None
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Stock Description
HSBC Holdings plc. The Group's principal activity is providing a range of banking and related financial services. It has an international network comprising some 10,000 properties in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.
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Option Trade Rationale
This is primarily a play on a potential fianancial disaster in Europe. The ECB President Jean-Claude Trichet is a complete idiot and he will screw this crisis up.
A year and a half ago, he kept Euro interest rates high when credit conditions were collapsing and financial markets were tanking. He actually said that he did not see a credit crisis unfolding.
Two weeks ago, Greece had credit issues and rather than holding closed door discussions, he publicly said the ECB would not bail out Greece. As a result, Greece held a bond auction. Initially, it went well, but then a few days later, the risk premium jumped and global investors made it known that the well had run dry.
Last week, Portugal held a 1-year bill auction. This is a short term issue with little risk of default and they were only able to attract buyers for 65% of it. As a result, they had to cancel the auction. They need this money immediately or it will have a cascading affect. Lithuania is in a similar situation and Latvia is also on the ropes.
The entire EU could unravel and HBC has tremendous risk exposure.
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Trading Game Plan
The ECB could have held an emergency meeting over the weekend to discuss financial aid - they did not. This would have calmed the market.
The ECB is satisfied with Greece's massive budget cuts, but the Greek labor unions plan to strike. They want wage increases and no labor cuts.
Over the weekend, the IMF met in Canada. Europe's credit crisis was discussed but no solutions were offered. This situation could deteriorate quickly. There is no sense of urgency.
HBC is trading lower today eventhough the market has rebounded. Investors are heading for the exits and the selling pressure is mounting.
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Stock Option Track Record
2/8/10 - The options traded between $2.10 and $2.20 after the alert and you had all day to get in. The makret and the stock weakned near the close.
3/3/10 - Sold 10 HBC March $50 puts @ $.40. A strong market save the stock after it released dismal earnings. It is ready to drop, we just ran out of time and had to exit. We lost $1770 (10 x $1.75 plus commissions 2 x $10).
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