Tag Archives: economy

BlackBerry($BBRY) Z10 UK Performance

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BBRY is having another good day today, a high of $16.89, but has now pulled back to $16.24. That being said, I would like to talk about some new data that came out.

Deutsche Bank conducted a survey in the UK to try and get an idea of how the new BlackBerry Z10 is performing. Analysts called 30 cell phone carriers in the UK and asked the same questions a new user who is in the market for a smartphone would ask. The negative that came out of the survey is that the BlackBerry Z10 isn’t being promoted much by carriers. The survey also found that sales representatives weren’t educated in using the new phone so they are hesitant in promoting something they aren’t sure how to use. This is not a good sign for BlackBerry. Below are some notes from the survey:

Results:

  • The iPhone 5 and Samsung Galaxy III are still the most recommended smartphones.
  • Out of the 30 phone carriers surveyed, only 2 recommended the BlackBerry as a smartphone.
  • A few sales representatives said they weren’t trained on the new BB10 operating software.
  • One sold have sold out of the Z10; some have sold many; and others have sold a few.
  • Reviews where mixed when they were asked to do a comparison between the iPhone 5, Samsung Galaxy III and the BlackBerry Z10.

After looking at these results, I’m more skeptical about the success of BBRY. The new phones are not released in the the US yet, so BlackBerry can still fix these issues that they’re facing abroad and not make the same mistakes when it gets to the US. I think the main reason carriers aren’t promoting the new BlackBerry Z10 is because they are not educated on all the new features of the phone. In my opinion, this is a mistake on BlackBerry’s part. Having unveiled this new phone so late in the game, BlackBerry should’ve held training sessions for sales reps. This way, sales reps would be familiar with the phone and would truly know why this phone might be better than any other smartphone currently on the market. Being familiar with the phone, they will be more likely to recommend the phone to users because they are able to explain all of the positives. Users with be more likely to sign a two year contract if they receive good reviews from the sales reps than if they don’t. Based on the survey, sales reps are currently recommending the iPhone 5 and the Samsung Galaxy III more often than the Z10.

That being said, I would look to take advantage of the volatility in the stock by using options to profit. However, I still am not 100% convinced that BlackBerry will be successful. I will still continue to see how BlackBerry deals with these problems and keep you updated on any new developments.

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Using Options to Profit on Low Volatility Stocks

When investing in the market, it’s not always necessary for the price of a security to move in order to make a profit. There are multiple ways to profit from low volatility stocks. Below I will discuss my two favorite option strategies which will allow you to profit when the price of the underlying security doesn’t move.

Iron Condor

This is by far one of my favorite strategies to use when I’m dealing with securities which have historically low movements in price. This strategy is called an Iron Condor, and is a non-directional strategy, meaning that a profit will be incurred if the price of the underlying security doesn’t experience high volatility. The profit, however, is typically low with an iron condor due to the fact that your risk is limited—unlike a naked call/put, where the loss can be infinite.

To put on an iron condor, a trader must open the following positions expiring in the same month:

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This will result in a net credit for the trade, which is collected upfront. If you look at the P&L Chart above, to maximize your profit, the price of the underlying security must stay between the Short Put strike and Short Sell strike.  While maximum loss occurs if the underlying stock price is higher than the Long call strike or lower than the Long Put strike.

Iron Butterfly

An Iron Butterfly is similar to an Iron Condor, however it usually offers a higher maximum profit due to the lower chance of gaining the maximum profit. Like an Iron Condor, this strategy also offers limited risk.  With this strategy, the probability of earning some sort of profit is relatively high, compared to other strategies.

To put on an Iron Butterfly, you must open the following positions expiring in the same month:

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This trade will result in a net credit, which will be collected upfront. As you can see from the P&L Chart above, profit will be maximized when the underlying stock price at expiration is equal to the strike price of the Short Call/Put.  Maximum loss, on the other hand, is realized if the underlying stock price is over the strike price of the Long Call or if it’s under the strike price of the long put.

These two strategies are my favorite to use when trying to profit from low volatile stocks. Like I mentioned above, the profit will be tremendously less than using naked calls/puts, however the risk is tremendously less as well, making these strategies a good way to make a nice consistent profit.

Check back early next week, as I will show you one of my trades using one of these strategies and keep you updated on how it does.

 

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The Week Ahead: 1/21 – 1/25

Earnings Reports

Company Ticker Date Estimate
3M MMM 24-Jan $1.41
Abbot Laboratories ABT 23-Jan $0.72
Apple AAPL 23-Jan $13.45
AT&T T 24-Jan $0.47
Baxter International BAX 24-Jan $1.26
General Dynaics GD 23-Jan $1.92
Google GOOG 22-Jan $10.61
Halliburton Co. HAL 25-Jan $0.61
HoneyWell HON 25-Jan $1.10
IBM IBM 22-Jan $5.25
Johnson & johnson JNJ 22-Jan $1.17
McDonalds MCD 23-Jan $1.33
Microsoft MSFT 24-Jan $0.75
Proctor & Gamble PG 25-Jan $1.11
Travelers TRV 22-Jan $0.17
United Technologies UTX 23-Jan $1.04
Verizion VZ 22-Jan $0.52

Economic Reports

Report Date Time Estimated Level Estimated Percent Change
Existing Home Sales 22-Jan 10:00AM ET 5.1M 1.19%
Jobless Claims 24-Jan 8:30AM ET 360k 6.94%
PMI Manufacturing Index Flash 24-Jan 8:58 AM ET 54 -0.37%
EIA Petroleum Status Report 24-Jan 11:00AM ET
New Home Sales 25-Jan 10:00AM ET 388K 2.92%
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Raise The Roof

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Just one week before the U.S. reached its borrowing limit of $ 16.4 trillion, Treasury Secretary Tim Geithner wrote a letter to congress informing them that he will be taking extraordinary and unconventional measures in order to buy time before the unthinkable happens: The U.S. government defaulting on their debt. This is nothing new to us. Just a couple years ago congress faced the same situation. In 2011 congress waited until the last minute to pass a deal. Furthermore, the deal they passed was merely “kicking the can down the road”. Now, we are faced the same issues we did then and politicians are having the same discussions and making the same demands. Republicans claim that they will not agree to raising the ceiling unless significant spending cuts are made. By rejecting the Republicans’ proposals time after time, the Democrats seem to be procrastinating as long as possible. In a way, they seem to be challenging Republicans. Once they approach the last few days before the deadline, the gravity of the situation will sink in and another deal will likely be made. Bernanke has recently stressed the importance of raising the debt ceiling. By raising the ceiling congress would be allowing the government to pay its current bills. Without raising the ceiling the U.S. would be forced to default on its liabilities. So what does this mean for you?

With so much media coverage it is important to consider the impact on consumer confidence. In 2011 the University of Michigan Consumer Sentiment survey decreased 25% between May and August, when a deal was finally reached. The uncertainty was reflected in the Dow, which decreased about 500 points or 3.9% during this time. Don’t be surprised if we see a similar effect this time around.

As the government approaches the deadline to raise the ceiling, Treasuries will lose value. This puts upward pressure on interest rates, ultimately working against the Fed’s easy money policy. As people feel that default is a greater possibility, their sentiment will be reflected through a slower economic recovery. My advice to you: keep a close eye on the tabloids and pray for congress to raise the roof.

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