Excerpt from the latest edition of Stock World Weekly. 

Trade Ideas

Phil mentioned a bullish trade idea for Ubiquity (UBNT, $34.96). “We like the 2016 $45/55 bull call spreads for $2. We may as well get 10 of those in the virtual Income Portfolio for $2,000 so we can keep an eye on them.”

Here are several other trade ideas from Phil:

NEM 2016 $20/25 bull call spread for $2.20 (bullish on Newmont Mining and gold).

FCX 2016 $30/37 bull call spread at $3.15 plus selling one 2016 $30 put for $3.20 for a net 0.05 credit (bullish on Freeport McMoRan and gold and copper).

NFLX Aug $340 put at $10 (bearish play on Netflix).

AAPL 2016 $520/600 bull call spread at $47.50 (bullish play on Apple, Inc.) 

Paul Price shared a trade idea in Market Shadows this week in One In, One Closed-Out:

Our newest trade involved the sale of four contracts of the Steiner Leisure (STNR) January, 2015, $40 puts for $4.00 per share.

STNR is a leading provider of spa services on cruise ships, hotels and premium urban day spas. It operates under a number of different monikers depending on venue. As of Feb. 1, 2014, Steiner was the sole beauty and wellness operator on 156 ships representing 18 different lines which ranged from high-end Crystal, Seaborne and Silversea to the more plebeian Carnival and Royal Caribbean lines.

The company has a decent balance sheet and has been building up book value significantly. From year-end 2005 through Dec. 31, 2013, book value more than tripled, rising from $9.17 per share to $28.17.

Our commitment in selling the puts obligates us to be ready to purchase 400 shares of STNR at a net cost of $36.00 ($40 strike – $4 put premium). That would be just 2-cents above the lowest trade price since mid-2010.

Maximum profit would be realized if STNR closes at $40 or above on Jan. 16, 2015. In that event, we’ll keep 100% of the $1,600 put premium received without needing to buy 400 shares of the stock. (One In, One Closed-Out)

Weekend Reading

Michael Snyder of The Economic Collapse writes about the horrendous GDP figure released last week and discusses how the mainstream media is whitewashing bad numbers and ignoring the possibility that the country may be in for another recession. (Economists: The U.S. Economy Shrank In Q1, But Better Days Are Just Around The Corner)

In U.S. Gasoline Plummets By Nearly 75%, Jeff Nielsen at the BullionBullsCanada blog, takes a look at the elaborate ways the government measures gasoline consumption and why fuel consumption has been dropping. 

Paul Price of Market Shadows discusses why stocks are still the best alternative for savers in New Cliche: Sell in May? Keep Profits Away.

Wolf Richter of The Testosterone Pit writes about the trouble ahead for Japan’s economy that Japanese leaders have brought upon themselves. 

The consumption tax is very broad, impacting goods and services bought by businesses and individuals, from haircuts and vegetables to construction materials. So the 3-percentage-point increase would be levied on much of the economy.

But here is the thing: money that people and companies keep in the bank earns nearly nothing, and even a crappy 10-year Japanese Government Bond yields less than 0.6% per year. But if buyers front-loaded major purchases by a few months or even a year to beat the consumption-tax increase – buying that refrigerator or heavy-duty truck a year earlier than they normally would, for example – they’d save 3% of the purchase amount. That’s pure income. And tax-free for individuals. The biggest no-brainer in Japanese financial history.

Every company and individual front-loaded whatever was sufficiently practical and substantive, and whatever they could afford. It started late last year and culminated in the January-March quarter. As a result, GDP soared at an annual rate of 5.9%, a phenomenal accomplishment for Japan. (The Wrath of Abenomics: Sales Collapse, Inflation Soars.) 

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