Pick for February

I decided to sell 4 Puts of HOGS at a $17.50 strike price for February.  Costing potentially $7000.

If you look at the table on the "Stocks and Stock Options" page you may notice three (***) asterisks following the quantity of contracts that I sold.  I wrote this in as an indicator that I bought and/or sold some of my contracts on margin.  Meaning I obtained more than what my current balance could purchase.  This allowed me to make a little more money.  I did this because I wanted to test out using Other People's Money (OPM), to make more money for myself.  As a precaution, I did not spend more than what I could cover from my emergency savings.  It worked out well for me last month when I sold CZZ Puts, so I thought I would give it a try again this month.

I am keeping my fingers crossed that HOGS does not fall below $17.50 this month.  I read that South Korea has been importing pork due to Foot and Mouth Disease in their herds, so I thought this might cause the price of pigs to go up.  Also, my charts show that the stock is close to being under bought.

Wild Ride in Rare Earth Metals

Trading in Rare Earth Elements has been a wild ride.  MCP has had some HUGE swings in the last few months.  I am glad that my hunches worked out.  In fact, at least one of my friends took my hunches and made a LOT of money.  When MCP was around $30, I had a gut feeling that it might go to $60 or $65.   I can not tell you why I thought that, I just did.  However, since I have been investing my money on a monthly basis, I missed out on the run where the stock price more than doubled in a short period of time.

Outside of my money for this blog, one thing my family invested in was REE, another rare earth metal stock.  We bought a July 2011 $14 Call for $1.15 on Dec 27th, and on Dec 29th sold it for $3.00.  We made $155.07 after all of the fees.  We could have made more if I had not become nervous.  I requested that we get out of the position when I saw the stock price retracting.  Afterward, I was frustrated with myself for letting fear get the best of me.  Then I stopped my negative self-talk, and focused on the positive..... We doubled our money!  I am learning to ignore the "Woulda, Coulda, Shoulda's" 

MCP's IPO lock-up is expiring on January 25 of this month, and I am curious if this will drive the stock price down to the $40 range or lower.

What I am researching next:

I did well with my investment on CZZ last month, but it is in the middle of a cycle on my charts.  I want to hold off on trading in it again until it gets closer to one of the strike prices listed for the options.  The stock price is currently at $13.89, and the option choices I am looking at for selling Puts are $12.50 and $15.

Newmount Mining Corp (NEM) looks interesting to me.  They are in the business of mining gold.  The stock price is around $55, my charts say it is under bought, and a $55 Feb 2011 Put can be sold around $1.59.  As long as the stock doesn't go too far below $55, I could make approximately 35% APY.

Yamana Gold inc. (AUY) is a gold mining company.  The stock price, at approximately $11, would allow me to buy 5 to 6 option contracts.  The charts tell me this stock is also under bought, and in the near future I expect the stock price will rise.

Silver Wheaton Corp (SLW).  This company makes 100% of its money from mining silver.  I recently read that silver prices are being manipulated, causing them to be artificially low.  The author said that the gold/silver ratio is around 1/50, and it should be around 1/14.  I have not researched the history of silver.  However, it does seem odd to me that considering how much this metal is used in manufacturing, used for medical purposes, as money, and in jewelry; and that it is supposedly in short supply; the price is so low.  Another article states there is a class action lawsuit against JPMorgan and HSBC for manipulating and suppressing the price of silver bar financial products.  With this in mind, I think that SLW is headed for higher prices.