WMT = Bargain

[jiesen]

WMT getting cheaper my the day

Almost hit 42 today, 40 may be just around the corner. I think my plan will be to wait for FNM and WMT both to get under 40, then sell my (Jan 06 $40) FNM puts and use the proceeds to buy WMT stock. I think I'll be able to get $4-5 for those puts if FNM hits 38 next month. And this hurricane along with a flurry of bankruptcies in October just might do it- only problem is, will I be sorry I cashed in so soon, when FNM hits $25 in the following month?

[New-born baby]

Jiesen

Almost hit 42 today, 40 may be just around the corner. I think my plan will be to wait for FNM and WMT both to get under 40, then sell my (Jan 06 $40) FNM puts and use the proceeds to buy WMT stock. I think I'll be able to get $4-5 for those puts if FNM hits 38 next month. And this hurricane along with a flurry of bankruptcies in October just might do it- only problem is, will I be sorry I cashed in so soon, when FNM hits $25 in the following month?

Jiesen,
Could you post an option play on WMT or FNM? Should I sell the calls or buy the puts? What strike price do you like?

I'd appreciate it.

[Runner]

This was the short play on WMT after the first rally failed.

[jiesen]

Jiesen,
Could you post an option play on WMT or FNM? Should I sell the calls or buy the puts? What strike price do you like?

I'd appreciate it.

Well, for FNM, I like the $40 Jan 06 puts, but it's more of a hedge for me, since I own several homebuilders right now as well as a few bank stocks. This helps me out if they all tank on a housing market disaster. Not only that, but FNM has issues of its own that could well send it down to $35 in the near future (no financials coming for who knows how long- no CFO, $11B or more may evaporate from the balance sheet, etc...). Anyway, if you want to take the risk, anything under $1 should be a good entry for this option- but there's a good chance the whole 'housing bubble' thing will just continue inflating for the rest of the year, and since no numbers will come out for FNM, nobody would see any problems for some time- and the puts will expire worthless, so don't expect any payoff on this one.

WMT, I think-note that I don't know for sure yet, as I'm not done evaluating this stock yet- is worth well over $40 but you could play the puts on this one for some easy cash. Sell the Oct $40 puts and buy $37.5 to hedge. You'll only net $0.1 or so, but it's free money. If WMT gets put to you, you'll own it at $39.9, which is a bargain price, and your loss potential is capped at a maximum of $2.5/shr.

But forget about nickels and dimes, NBB, for you I'd recommend selling your BMHC and collecting your $1M from your benefactor today, since it's popped $4 and is now over the price you paid for it. Remember, don't miss the forest for the trees!

[New-born baby]

$100

Well, for FNM, I like the $40 Jan 06 puts, but it's more of a hedge for me, since I own several homebuilders right now as well as a few bank stocks. This helps me out if they all tank on a housing market disaster. Not only that, but FNM has issues of its own that could well send it down to $35 in the near future (no financials coming for who knows how long- no CFO, $11B or more may evaporate from the balance sheet, etc...). Anyway, if you want to take the risk, anything under $1 should be a good entry for this option- but there's a good chance the whole 'housing bubble' thing will just continue inflating for the rest of the year, and since no numbers will come out for FNM, nobody would see any problems for some time- and the puts will expire worthless, so don't expect any payoff on this one.

WMT, I think-note that I don't know for sure yet, as I'm not done evaluating this stock yet- is worth well over $40 but you could play the puts on this one for some easy cash. Sell the Oct $40 puts and buy $37.5 to hedge. You'll only net $0.1 or so, but it's free money. If WMT gets put to you, you'll own it at $39.9, which is a bargain price, and your loss potential is capped at a maximum of $2.5/shr.

But forget about nickels and dimes, NBB, for you I'd recommend selling your BMHC and collecting your $1M from your benefactor today, since it's popped $4 and is now over the price you paid for it. Remember, don't miss the forest for the trees!

I want $100 per share for BMHC.

[jiesen]

I want $100 per share for BMHC.

what about the FNM puts? Did you look into those when they were under $1?

[New-born baby]

Should have

what about the FNM puts? Did you look into those when they were under $1?

No, I didn't. Hey, why don't you post a good call/put option every now and then for people like me? I think you are pretty sharp in the option business (and the bottom fishing business, too).

[Runner]

WMT tried to move out but was quickly slapped back to reality.

[billyjoe]

Did anyone read the Walmart writeup in IBD ? They actually admitted their philosophy is to first eliminate all competition . Then figure out how to raise prices. I knew that but never thought they'd fess up. Those arrogant s.o.b's



billyjoe

[New-born baby]

Eliminate

Did anyone read the Walmart writeup in IBD ? They actually admitted their philosophy is to first eliminate all competition . Then figure out how to raise prices. I knew that but never thought they'd fess up. Those arrogant s.o.b's



billyjoe

What day did that article come out? In a free market, you cannot eliminate your competition.

[billyjoe]

New-born,
"We've certainly borrowed every good idea we came across" (Sam Walton)

Oct.3rd , '05 IBD "Walton figured it was better to saturate a market and keep rival retailers out, then work on raising the individual sales count" (Lisa Schmeiser, IBD)

Ok, so it isn't a direct quote from Walton , but we know what the plan is and it's working


billyjoe

[New-born baby]

Sammy

New-born,
"We've certainly borrowed every good idea we came across" (Sam Walton)
billyjoe

BillyJoe,
That sounds like an excellent business plan to me. I never thought the market for stupidity was too strong. Kinda like air, its everywhere Too much supply for the demand.
Where did Sam get such a novel idea?

[billyjoe]

New-born,
Here's my scenario on Walmart's future :

Labor strife and infighting between management and "associates" escalate. A definite line forms separating union and non-union leaning "associates". Sabotage and "associate" violence become commonplace. "Attention, associates, cleanup in aisles 1-99". Picketers are attacked on company property. Deaths occur, management blames "associates". Federal troops are called in for an attack on America's largest employer is an attack on America herself. National guardsmen man checkout counters and stock shelves. Customers stay away in droves. Mom and pop stores start appearing everywhere, many offering "made in America" products. China demands trade protection and incentives.

[New-born baby]

New-born,
Here's my scenario on Walmart's future :

Labor strife and infighting between management and "associates" escalate. A definite line forms separating union and non-union leaning "associates". Sabotage and "associate" violence become commonplace. "Attention, associates, cleanup in aisles 1-99". Picketers are attacked on company property. Deaths occur, management blames "associates". Federal troops are called in for an attack on America's largest employer is an attack on America herself. National guardsmen man checkout counters and stock shelves. Customers stay away in droves. Mom and pop stores start appearing everywhere, many offering "made in America" products. China demands trade protection and incentives.

Sounds very plausible. One bad thing though, I heard that Walmart is now selling shares of BMHC in the clearance aisle.

[jiesen]

Sounds very plausible. One bad thing though, I heard that Walmart is now selling shares of BMHC in the clearance aisle.

Not to mention KBH and TOL. Oh, the carnage!

Well, at least my FNM puts help me sleep better while holding these future $$MM winners by offsetting some of the "paper" losses.