I sold 3 GSK Feb 42.50 puts for $2.15.
December options contracts I wrote on LNN, KCI, and MOS expired unexercised.
My portfolio is currently 73% in stocks, 20% in investable cash, and 7% in cash securing puts.
Showing posts with label MOS. Show all posts
Showing posts with label MOS. Show all posts
Sunday, December 20, 2009
Thursday, September 17, 2009
Sold more MOS puts
Today I sold 3 MOS $50 puts for $3.80/share. My previous $45 MOS puts expired un-exercised last month. I still want MOS, since I like the company and I no longer have an agriculture position since I sold Agrium also last month). I compared MOS and AGU as long term investments.
AGU:
P/E ratio | 10.22
revenue / employee | $ 1.18 million
dividend yield | 0.21%
price / tangible book | 1.996
price / sales | 0.8293
price / free cash flow | 15.46
return on equity | 19%
return on assets | 16.89%
leverage | 2.166
current ratio | 1.953
debt / capital | 0.2679
net profit margin | 9.05%
Annualized 5Y revenue growth | 31%
YOY Revenue growth | 90%
Gross margin | 26%
EBITA margin | 9.5%
cash/share 2.29
MOS:
P/E ratio | 10.98
revenue / employee | $ 1.428 million
dividend yield | 0.28%
price / tangible book | 3.032
price / sales | 1.946
price / free cash flow | 19.05
return on equity | 30.87%
return on assets | 19.19%
leverage | 1.493
current ratio | 3.273
debt / capital | 0.1289
net profit margin | 9.22%
Annualized 5Y revenue growth | 34%
YOY Revenue growth | 4.9%
Gross margin |30%
EBITA margin | 28.3%
Cash/Share | 6.08
The two companies have very similar numbers, and either would make a good investment. For me, the deciding factor was the cash reserves held by MOS. MOS has a better current ratio, more cash per share, and is less leveraged. This cash hoard gives MOS more flexibility in its response to changing market conditions; it can afford to expand, buy a distressed rival, or hunker down in lean times.
In the ag space, I also really like Terra Nitrogen. However, I'm still trying wrap my head around their M.C. Escher business model Terra is both TRA (selling nitrogen products) and TNH (which owns a nitrogen manufacturing facility). Here's an excerpt from their website which attempts to clarify the relationship:
"[TRA]directly or indirectly holds approximately 75% of the outstanding common units of [TNH], which are traded on the New York Stock Exchange, and the remaining 25% of [TNH]’s units are held by the public. In addition to operating the [TNH] manufacturing facility in Verdigris, [TRA] also owns and operates five other North American manufacturing facilities, and has a 50% interest in an ammonia facility in Trinidad and 50% interest in GrowHow UK Ltd., a United Kingdom joint venture. [TRA] also has a deep-water terminal in Donaldsonville, Louisiana, and 50% interest in Houston Ammonia Terminal near Pasadena, Texas. "
TRA and TNH both have great management; ROE is 38% and 152% (!) respectively. However, while I can keep an eye on them, what about these little private companies? If GrowHow UK Ltd. accidentally vents ammonia gas, TRA will also be sued, whether or not they're actually responsible. Are these shipping arrangements in LA and TX bringing in income or are they just an expense? What if TRA decides to raise capital by selling it's 75% stake in TNH?
AGU:
P/E ratio | 10.22
revenue / employee | $ 1.18 million
dividend yield | 0.21%
price / tangible book | 1.996
price / sales | 0.8293
price / free cash flow | 15.46
return on equity | 19%
return on assets | 16.89%
leverage | 2.166
current ratio | 1.953
debt / capital | 0.2679
net profit margin | 9.05%
Annualized 5Y revenue growth | 31%
YOY Revenue growth | 90%
Gross margin | 26%
EBITA margin | 9.5%
cash/share 2.29
MOS:
P/E ratio | 10.98
revenue / employee | $ 1.428 million
dividend yield | 0.28%
price / tangible book | 3.032
price / sales | 1.946
price / free cash flow | 19.05
return on equity | 30.87%
return on assets | 19.19%
leverage | 1.493
current ratio | 3.273
debt / capital | 0.1289
net profit margin | 9.22%
Annualized 5Y revenue growth | 34%
YOY Revenue growth | 4.9%
Gross margin |30%
EBITA margin | 28.3%
Cash/Share | 6.08
The two companies have very similar numbers, and either would make a good investment. For me, the deciding factor was the cash reserves held by MOS. MOS has a better current ratio, more cash per share, and is less leveraged. This cash hoard gives MOS more flexibility in its response to changing market conditions; it can afford to expand, buy a distressed rival, or hunker down in lean times.
In the ag space, I also really like Terra Nitrogen. However, I'm still trying wrap my head around their M.C. Escher business model Terra is both TRA (selling nitrogen products) and TNH (which owns a nitrogen manufacturing facility). Here's an excerpt from their website which attempts to clarify the relationship:
"[TRA]directly or indirectly holds approximately 75% of the outstanding common units of [TNH], which are traded on the New York Stock Exchange, and the remaining 25% of [TNH]’s units are held by the public. In addition to operating the [TNH] manufacturing facility in Verdigris, [TRA] also owns and operates five other North American manufacturing facilities, and has a 50% interest in an ammonia facility in Trinidad and 50% interest in GrowHow UK Ltd., a United Kingdom joint venture. [TRA] also has a deep-water terminal in Donaldsonville, Louisiana, and 50% interest in Houston Ammonia Terminal near Pasadena, Texas. "
TRA and TNH both have great management; ROE is 38% and 152% (!) respectively. However, while I can keep an eye on them, what about these little private companies? If GrowHow UK Ltd. accidentally vents ammonia gas, TRA will also be sued, whether or not they're actually responsible. Are these shipping arrangements in LA and TX bringing in income or are they just an expense? What if TRA decides to raise capital by selling it's 75% stake in TNH?
Monday, August 24, 2009
Aug 22 2009 Options expirations
I had several options positions expire over the weekend. Puts I wrote on PCL (Plum Creek Lumber) MDT (Medtronic) and MOS (Mosaic) all expired un-exercised. That capital is now free to be used in new trades. I plan to sit on it for a while until the market dips.
Shares of SLV were put to me; I immediately used these to write Jan2010 calls at a $17 strike price. I was paid $0.50 a share for these, for a total of $450 income on the 9 contracts. If un-exercised, my return will be 2.9% for the trade or 0.6% per month--negligible compared to puts, but acceptable for a covered call since the risk is significantly less. As detailed below, SLV is in my portfolio only to generate income via puts and calls.
I had written covered calls against VZ (Verizon) and MCK (McKesson). VZ was called away, fairly close to my $31 strike price. My MCK calls, however, had a strike of $45--when my shares were called away, I could have sold them on the open market for $56!
That's the risk of covered calls; you may not make as much money as you could have. My initial buy price on MCK was $23.70, so when it was at $44, I was happy to agree to sell it for $45. I never dreamed the price would increase so dramatically in less than two months.
Shares of SLV were put to me; I immediately used these to write Jan2010 calls at a $17 strike price. I was paid $0.50 a share for these, for a total of $450 income on the 9 contracts. If un-exercised, my return will be 2.9% for the trade or 0.6% per month--negligible compared to puts, but acceptable for a covered call since the risk is significantly less. As detailed below, SLV is in my portfolio only to generate income via puts and calls.
I had written covered calls against VZ (Verizon) and MCK (McKesson). VZ was called away, fairly close to my $31 strike price. My MCK calls, however, had a strike of $45--when my shares were called away, I could have sold them on the open market for $56!
That's the risk of covered calls; you may not make as much money as you could have. My initial buy price on MCK was $23.70, so when it was at $44, I was happy to agree to sell it for $45. I never dreamed the price would increase so dramatically in less than two months.
Monday, July 20, 2009
When your chickens come home to roost, remember to collect the eggs.
I was put 100 shares of FLS from a put I wrote in May. The command was "sell to open 1 contract of FLSSN. Premium $5.90/share. Strike $70/share. Expiration July."
My income from this put was $590. The stock price was approximately $68/share when the contract expired, so I bought the shares at $70/share ($64.10/share including the premium, $70 - $5.90).
Naturally, I turned right around and wrote calls on my new FLS stock. I wrote 1 contract January 2010 FLS calls at a strike price of $80, for $4.20/share. The period of the call is about 6 months, which is about as long as I'm comfortable with. So, at this point I have bought FLS for $70/share, and I have earned $10.10 ($5.90 + $4.20) on my stock. That's a 14% return (I'm rounding down to keep it simple and account for transaction fees, which vary by which broker you choose). If my shares are called away in January, I will have made a 28.7% return ($80 strike - $70 purchase price = $10. $10 profit + $5.90 put income + $4.20 call income = $20.10 total income. $20.10/$ 70 = 0.287 ). If my shares aren't called away in January, I'll still have the premiums, plus my shares. Here I am not including the dividend, which is a 1.7% yield at current prices.
I have also written August $45 puts on Mosaic. At 36 days, this is a shorter term than I would usually consider (I like a term from two to six months). I chose this option because a)I would be content to buy MOS at $45 and b) this put offered an unusually good return relative to longer-termed options. I would consider $40 and $45 puts on this stock (currently trading at $48).
Compare the August, September, and December puts, at 33 days (1.1 months), 64 days (2.13 months) and 155 days (5.17 months) respectively.
As you can see in the screen cap, the percentage return per month (premium / share price = percentage return. Percentage / time period (in months) = percentage return per month) is unusually attractive for one option; the August $45 put.
Even though the dollar value for the December $45 puts is the highest, the August $45 puts offer the best value. Since I also would be pleased to purchase this stock at that price, I wrote that put. If I wasn't willing to pay $45 for the stock, I wouldn't consider it no matter how nice the return looked.
FLS: When your chickens come home to roost, remember to collect the eggs. When you get income from puts, and then the shares are put to you at your strike price, consider adding to that income by writing calls. Be sure you would be willing to sell at your call's strike price.
MOS: It's your percentage return, not the dollar amount of the premium, that should draw your attention to the stock. No put has value to me if I'm unwilling to buy at the put's strike price.
For both: Write calls only on stocks you'd be happy to sell at that strike price. Write puts only on stocks you'd be happy to buy at that strike price. I write options as a way to generate income within my overall investment strategy, not as speculation.
My income from this put was $590. The stock price was approximately $68/share when the contract expired, so I bought the shares at $70/share ($64.10/share including the premium, $70 - $5.90).
Naturally, I turned right around and wrote calls on my new FLS stock. I wrote 1 contract January 2010 FLS calls at a strike price of $80, for $4.20/share. The period of the call is about 6 months, which is about as long as I'm comfortable with. So, at this point I have bought FLS for $70/share, and I have earned $10.10 ($5.90 + $4.20) on my stock. That's a 14% return (I'm rounding down to keep it simple and account for transaction fees, which vary by which broker you choose). If my shares are called away in January, I will have made a 28.7% return ($80 strike - $70 purchase price = $10. $10 profit + $5.90 put income + $4.20 call income = $20.10 total income. $20.10/$ 70 = 0.287 ). If my shares aren't called away in January, I'll still have the premiums, plus my shares. Here I am not including the dividend, which is a 1.7% yield at current prices.
I have also written August $45 puts on Mosaic. At 36 days, this is a shorter term than I would usually consider (I like a term from two to six months). I chose this option because a)I would be content to buy MOS at $45 and b) this put offered an unusually good return relative to longer-termed options. I would consider $40 and $45 puts on this stock (currently trading at $48).
Compare the August, September, and December puts, at 33 days (1.1 months), 64 days (2.13 months) and 155 days (5.17 months) respectively.
As you can see in the screen cap, the percentage return per month (premium / share price = percentage return. Percentage / time period (in months) = percentage return per month) is unusually attractive for one option; the August $45 put.
Even though the dollar value for the December $45 puts is the highest, the August $45 puts offer the best value. Since I also would be pleased to purchase this stock at that price, I wrote that put. If I wasn't willing to pay $45 for the stock, I wouldn't consider it no matter how nice the return looked.
FLS: When your chickens come home to roost, remember to collect the eggs. When you get income from puts, and then the shares are put to you at your strike price, consider adding to that income by writing calls. Be sure you would be willing to sell at your call's strike price.
MOS: It's your percentage return, not the dollar amount of the premium, that should draw your attention to the stock. No put has value to me if I'm unwilling to buy at the put's strike price.
For both: Write calls only on stocks you'd be happy to sell at that strike price. Write puts only on stocks you'd be happy to buy at that strike price. I write options as a way to generate income within my overall investment strategy, not as speculation.
Subscribe to:
Posts (Atom)