Tyler Craig: Bear VXX Calls
“Perhaps my best call of 2012 has been going bearish on everyone’s favorite ‘volatility ETF,’ the iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX). In “A Bearish Play on the Volatility ETF to Start the New Year,” published Jan. 31, I contended the bullish equities market — coupled with persistent contango in the term structure of VIX futures — would spell the ETF’s day-by-day demise.
“As suspected, the VXX has sucked wind for the past two months and currently is down 30% year-to-date. The initial February bear call spread suggested reached its max profit of 80 cents per spread, and the March bear call spread is well into the profit zone.
“The future continues to look bleak for the VXX. Actual market volatility remains depressed, and the VIX futures remain in steep contango (March VIX futures are trading at 20.85 with April VIX futures at 24.15). Barring some unforeseen major market correction, using short-term pops in the VXX as an opportunity to enter bearish spreads should continue to bear fruit.”
Charles Sizemore: Daimler, Telefonica
“In early January, I recommended that investors aggressively buy German stocks, and specifically shares of luxury automaker Daimler (PINK:DDAIF). My rationale was straightforward enough: ‘When you buy iconic, first-rate companies trading at prices not seen in a generation, you don’t have to get the timing exactly right. You can be a little early or a little late and still do just fine. And right now, I recommend investors use any short-term setbacks to accumulate shares of Germany’s finest multinational companies. German blue chips might be investors’ best bet for triple-digit gains over the next 12 to 24 months.’ In less than two months, Daimler is up 19%.
“Alas, they can’t all be like that. For the same basic reasons, I recommended that investors buy shares of Spanish telecom giant Telefonica (NYSE:TEF). While German stocks have rallied, Spanish stocks have largely stalled, and Telefonica was no exception. Telefonica is down 6% for the year and has drifted downward for most of the past month.”
Gene Marcial: Dividend Stocks
“On Feb. 3, I discussed ’3 Stocks With Big Dividend Growth Potential.’ Dividend stocks aren’t usually expected to show much price gains, as they are mainly attractive payout plays. But two of the stocks I recommended — Mead Johnson (NYSE:MJN) and National Oilwell Varco (NYSE:NOV) — have risen a respective 6% and 4% in price, which suggests that they could, indeed, meet higher forecasts for their stocks in a year. CF Industries (NYSE:CF), however, is down 3.5%.
John Kmiecik: LAMR Long Calls
“Here was a trade idea that was mentioned on the first trading day of 2012, and it turned out to be a nice way to start out the year. Lamar Advertising (NASDAQ:LAMR) announced solid earnings back in November, and fourth-quarter revenue was supposed to rise as well. The initial trade idea was meant to be triggered over $27.65 (a recent high) when the stock was trading at $27.50. The stock just recently moved above all of its moving averages and was continually setting higher highs and higher lows, price action that defines an uptrend.
“The original price at which the Feb. 27 call was purchased was $1.90. An initial target for the underlying stock was $30, which LAMR hit on Jan. 17. The stock went above $32 in the middle of February, giving the call an intrinsic value of $5 (in addition to the minimal time value left in the option). The stock still was in an uptrend until Tuesday, when it gapped to a pivot low, making it debatable as to whether the uptrend remains in place. The shares currently are trading at $31.”