Yong-Long Lai

Decided to get into WPL again (this will be the 3rd straight month) This is the same reason as the past 2 trades, WPL has been channelling between 39-40 for the past 2-3 months, there is plenty of support at $38.

The Trade (WPL)
Sell May $38.0 Puts @ $0.41
Buy May $37.5 Puts @ $0.30

Expiry = 24/05/2007
Share/Contract = 1000
Max Profit = 0.11 (0.41-0.30)
Max Risk = 0.39 [(38.0-37.5) - (0.41-0.30)]
Return on Risk = 28.21%
Breakeven = $37.89

I opened 10 contracts:
Reward for trade (excluding fees) $1,100.0
Reward for trade (including fees) $890.6
Value At Risk $3,900.0

The above assumes that on 24th May 2007 WPL is trading at or above $38.0
(WPL closed Friday @ 39.25)

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Opened a NWS position this month, this is the first time I opened a NWS position. NWS has been sideway trading for the past 2-3 month and has created a strong support line at around 29.5 and a resistance at around 30.5 (channelling) There is potential for NWS to return to its previous high of32.5 from the recent pull back.

The Trade (NWS)
Sell May $29.5 Puts @ $0.34.5
Buy May $29.0 Puts @ $0.21

Expiry = 24/05/2007
Share/Contract = 1000
Max Profit = 0.135(0.345-0.21)
Max Risk = 0.365 [(29.5-29.0) - (0.345-0.21)]
Return on Risk = 36.99%
Breakeven = $29.365

I opened 10 contracts:
Reward for trade (excluding fees) $1,350.0
Reward for trade (including fees) $1140.6
Value At Risk $3,650.0

The above assumes that on 24th May 2007 NWS is trading at or above $29.5
(NWS closed Friday @ 29.85)

Today is option expiry day!

3 of my positions expired:

OXR: $1,020.5 ($2,668.20-$1,647.70) - this was a rolled out position from last month
SGB: $940.60
WPL: $890.60

A total of $2,851.7 for April… not bad for my few hours  of work last month and only risking $10,500.60 (Pretty soon I’ll be able to replace my income) The best thing about this is I don’t have to pay tax until the financial year! This means I can use this money and roll it back into the strategy and make more money! This is the power of compounding!

Anyways, I will be spending the next few days to open up 3 positions to replace this one. (most probably take me a few hours, or if i’m lazy just follow one of the recommendation)

Wow, today was an exiciting day, the Australian market was down today, however all the zinc producers were up heaps! I’ve been stalking these stock for a while now, today I decided to open 2,400 PEM @ 4.211 and 1,700 KZL @ 5.869. Why? cause they are fundamentally good stocks, they have been hammered in the market over the past 5-6 months and this is the first few month of recovery (ie. there is a tecahical support, higher low, higher high etc.) there is good support level. There is strong support at KZL @ $5.00 & around $5.55. For PEM there definitely support at around $3.00 and again at $3.85

PEM

KZL

Nik Halik has a CFD Mastery program for the people who are interested…

Opened an OSH position on the Australian stock market yesterday (18 April 2007) – totally forgot about it. I opened 5,500 OSH CFD @ 3.66 and below is the analysis I quickly did when my broker called me.

Looking at the charts, there is very strong support lines at $3.40. OSH is currently in an up trend for the past 6 months following a very large correction. There is potential for OSH to return back to its previous high of $4.50. Technically OSH is sound in my books.

Following the fundamental rules that I learnt from Daniel Kertcher I looked at some of the basic profitability indicators:

• Earning Per Share was a little low at 5-6% (we want >=10%). 
• Earning Growth rate was also a little low @ 1-2% (we want >=5%).
• Not sure what the Revenue growth is,  but I remember the broker saying a +ve number (we want >=10%).
• The profit margin is insanely high at around 50%, (we want>=30%).
• currently ratio is 2-3:1 which is good (>=2:1 is good).
• Return on Equity is 16% (we want >=15%).
• Market capitalisation, ~4billion, is not the biggest, but its one of the biggest of the 2nd tier.
• There’s obviously a continuing high demand for oil and gas (energy) – so we don’t expect it to go bust over night

 What does all this mean?
earning per share – making sure the company is earning money!
earning growth rate – making sure the company will be making money in the FUTURE
revenue growth rate – making sure they are selling more stuff, because companies can reduce cost to increase profit (cost cutting) we don’t want cost cutting companies
profit margin – making sure they can compete with others by cutting their margin (if they need to)
current ratio – making sure they have enough cash to pay wages, short term borrowings, operating cost etc.
return on equity – making sure money that is reinvested is earning more than what we can earn by clicking a button
market capitalisation – making sure its a big player

All in all, OSH is technically strong, could have been better on fundamentals, but seems to be relatively profitable. There currently good news in the market and is a takeover target, so hopefully this will push the price up. I don’t expect it to go back up to $4.50, but I expect it to get to around $4. Its about a 10% growth, which will 100% my portfolio with CFD.

Thats all folks.