QSII ==> The Merry Christmas Winner

[mrmarket]

It’s time to turn the calendar page again. That also means it will be time for $$$MR. MARKET$$$ to go take his annual physical. Getting a physical is a good thing. My doctor always says, “My my $$$MR. MARKET$$$ what big arms you have!” Then he says, “My My $$$MR. MARKET$$$ what high cholesterol you have! Has someone been bringing you the finest meats and cheeses?”

It’s not a perfect world, and certainly the waiting time in the doctor’s office is considerably less than perfect. I mean, how many times can I read Children’s Highlights? We all must remember the lessons of Goofus and Gallant:

http://img32.exs.cx/img32/4139/gag4ks.jpg

Funny thing is, everything Goofus does seems to make more sense to me than what Gallant does.

Anyway, the wait in the doctor’s office is so excruciatingly long because most doctors are still back in the stone age when it comes to record keeping. You got it..when it’s time to go home, they fly off of their Brontosaurus and say Yabba Dabba Doo. Meanwhile all the crinkled manila folders fall off the top of the filing cabinets and your prescious medical records get coffee stained. Then the janitor comes in and eats the donuts left in the box. But he doesn’t like the coconut one so he sprinkles the frosting all over your EKG.

There is a solution to this madness. It is called Quality Systems, Inc. (QSII).

Today I bought QSII at 78.25. I will sell it in 4 to 6 weeks at 90.08. Here’s why I like QSII:

Quality Systems Inc., comprised of the QSI Division and a wholly owned subsidiary, NextGen Healthcare Information Systems, Inc. develops and markets healthcare information systems that automate certain aspects of medical and dental practices, networks of practices such as physician hospital organizations (PHO's) and management service organizations (MSO's), ambulatory care centers, community health centers, and medical and dental schools.

The Company, a California corporation formed in 1974, was founded with an early focus on providing information systems to dental group practices. In the mid-1980's, they capitalized on the increasing focus on medical cost containment and further expanded their information processing systems to serve the medical market. In the mid 1990's they made two acquisitions that accelerated our penetration of the medical market. These two acquisitions formed the basis for what is today the NextGen Division. Today, they serve the medical and dental markets through their two divisions.

The two Divisions operate largely as stand-alone operations with each Division maintaining its own distinct product lines, product platforms, development, implementation and support teams, sales staffing, and branding. The two Divisions share the resources of the "corporate office" which includes a variety of accounting and other administrative functions. Additionally, there are a small number of clients who are simultaneously utilizing software from each of our two Divisions.

The QSI Division, co-located with our Corporate Headquarters in Irvine, California, currently focuses on developing, marketing and supporting software suites sold to dental and certain niche medical practices. In addition, the Division supports a number of medical clients that utilize the Division's UNIX(1) based medical practice management software product.
The NextGen Division, with headquarters in Horsham, Pennsylvania, and a second significant location in Atlanta, Georgia, focuses principally on developing and marketing products and services for medical practices.
Both Divisions develop and market practice management software which is designed to automate and streamline a number of the administrative functions required for operating a medical or dental practice.

Quality Systems future looks promising due to strength in its core product Nextgen, strong balance sheet (about $4.25 per share in cash and no long term debt), anticipated strong near term prospects driven by handful of larger contracts.

Quality Systems is one of the fastest-growing and highest regarded software companies addressing the market for electronic medical records (EMR). That’s right, now more donut smeared manila folders. QSII has won many industry awards to support their position in this frontier market.

Over the past several years the demand fpr QSII’s products has accelerated as healthcare information technology spending has increased, especially for products that enable medical professionals to cut costs and improve efficiency. Think of it this way. If you wanted to open an Excel file or Word document, you’d just go to your computer and click “File Open”. In the medical profession, documents are still mostly on paper and accessing these documents involves getting up off your ass and climbing a shelf. How would you like doing that every time you wanted to open a spreadsheet on your PC. Starting to get the picture now?

The EMR market is in its very early stages, with only about 20% penetration in the markets that they know about. Most of the 600,000 physicians in the U.S. will convert to electronic records-keeping and management in the next few years. That’s a lot of sales calls for QSII. Each system they sell goes for hundreds of thousands of dollars. The best thing is that each incremental sale is almost all profit! The hardest part for QSII is to get the word out, let doctors know it exists. Adoption of these systems has been a stumbling block because physicans are resistant to change. Plus many doctors are cheap. They have to save their quatloops to buy new cars, and jewelry for their wives and country club memberships. However, EMR is going to soon become a necessity rather than a luxury.

Patrick Cline, President of NextGen, expects sales to double and NextGen is feverishly trying to build its sales force. The fact that they are looking to add to headcount indicates that sales growth will be a self fulfilling prophesy.

President Bush's proposal to more than double spending for computerized health record testing, to $125 million has certainly been a key catalyst. Since 2002, QSII has generated 26% average organic growth while EBITDA margins have expanded by 800 basis points. More recently, revenues have been growing at a 39% clip, year over year. Also, Health care providers are rushing to store patients' records electronically to become compliant with the Health Insurance Portability and Accountability Act, or HIPAA.

"Hippa, by all accounts, is going to be a tremendous burden to medical practices because it deals with the exchange of clinical and administrative info," Cline said. "It's designed to simplify transactions and protect patients' privacy and the security of information. It's going to be difficult to comply with these laws without an electronic system."

What about competition? Sure there’s competition, but NextGen is the best. NextGen offers some of the most flexible products because they can work with more than 25 kinds of practice management software. One of the differentiating features of Quality Systems' NextGen products is that they interface with so many different systems. They're not requiring an office to replace everything they have. NextGen software can also be set up to fit medical practice's workflow. A Quality salesperson can model an electronic form after a paper one. The salesperson can make the patient admission form look exactly like the paper form. So when they go to show the system to sell it to the practice or train the users, the comfort factor is high.

This revenue growth for QSII is well above the healthcare IT market growth rate and the growth of its direct competitors. Translation  they are kicking major ass. The great news is that recurring revenue is 45% of sales, meaning that we can expect this sales growth to continue, at least in the near future.

Now don’t get me wrong, QSII’s fantastic story ain’t no secret. Look at this chart:

http://chart.finance.yahoo.com/c/1y/q/qsii

The stock is up 172% in the last 12 months. That’s fine with me. QSII’s PE is 53. Is that expensive? Hell yea it is. But that’s what I said about HOLX’s PE also. Sometimes you just have to jump on the biggest baddest bull and ride it for another 6 seconds. That’s what I’m doing here with QSII. I have a month before earnings come out and all indications are that the next earnings release will be very positive. At this kind of PE, all I can say is I hope I’m right. This could be a quick win or a punishing fall!

So my bet is that earnings will continue to be strong. The great thing about QSII is that they never give any forward guidance. This means that the ANAL-ysts are completely in the dark about where this company is going. As a result, QSII does not feel compelled to manipulate numbers to meet targets that they have set for Wall Street. All they need to do is make sure the salesman are getting out to the physicians and taking them on deep sea fishing trips and college bowl games.

Some of the most famous doctors in Florida love to go to cocktail parties. They also love their new computer systems with DSL capability. It’s excellent for accessing digital images and whatnot.

How does all of this compute to earnings? In November, Quality Systems, Inc. announced the results of operations for its fiscal 2006 second quarter ended September 30, 2005. The Company posted net revenues of $29.5 million in the second quarter, an increase of 39% from the $21.2 million generated during the same quarter last year. The Company reported net income of $5.8 million, an increase of 56% over net income of $3.7 million earned in the comparable quarter of the prior year. Fully diluted earnings per share was $0.43 in the quarter, an increase of 54% over the fully diluted $0.28 per share earnings recorded in the same quarter last year.

The revenue and net income results achieved in the quarter were records for the Company. Results in the second quarter were driven by record revenue and profit in the Company's NextGen Healthcare Information Systems division. For the quarter, the Company's NextGen Healthcare Information Systems division posted record revenue of $25.5 million, up 48% over the same quarter prior year and record operating income of $9.9 million, up 62% over the same quarter of the prior year.

So far so good. But where is this ship sailing? ANAL-ysts, with no guidance from the company, are projecting March 06 earnings to be $0.47/share on $34 MM in revenue. For the fiscal year 2006, they are projecting $1.70 per share on $122 MM in revenue. Historically, QSII has surprised to the upside by about 12% .

$$$MR. MARKET$$$ thinks that the ANAL-ysts are pretty close on the revenue target but they haven’t quite factored in the economies of scale that go on the margin side. As a result, $$$MR. MARKET$$$ predicts that 2006 revenues will come in at $134 MM with EPS of $1.88. If QSII can carry its market premium PE of 53, we’ll see that translate to a share price of $97.76, which is greater than my sales target.

Here’s the secret. How do I know revenues will climb in the short term? Remember, they are selling software and software services. They aren’t a factory or a restaurant chain, so it is easy to add or reduce staff to meet demand for their product. If they see demand in the marketplace, they’ll add headcount. QSII full time employee headcount is up to 455 (as of last quarter), up from 417 in the prior quarter, and 358 in the prior year. The annualized revenue per full time employee is $260,000 which is near their historical peak. Their annual employee growth of employees is 27%. If their revenue per employee is increasing, not decreasing, any addition to staff between this quarter and next quarter (and they are adding to staff) will generate an even higher percentage of sales growth. The kicker is that each additional sales dollar is bringing in more earnings per dollar because margins are increasing. Make sense?

My guess is that owning QSII is going to be a roller coaster ride. Every time someone over there farts, we’ll see some share price movement. At these high PE levels, it’s not for the faint of heart. However, my portfolio has quite a few low P/E stocks in it, and I’d figure I’d spice it up a little, at least this one time, going into the new year. Earnings will probably come out in early February. If I’m on target, I’ll be out of this stock before earnings come out. (If I’m reading the chart correctly, it looks like it is forming a cup, so the price run-up will be sooner rather than later.) If I have to hold it through earnings, I’ll need to drink heavily in anticipation of them smashing their numbers. The market seemed to react reasonably well to their prior earnings releases, so holding through news shouldn’t be to painful.

Oh well, if it gets painful, I can go see the doctor.

I am HUGE! Bring me your finest eats and cheeses!

$$$MR. MARKET$$$

http://www.mrmarketishuge.com

PS For all you $$$MR. MARKET$$$ trivia buffs, you might note that QSII was purchased before and was #15 in my streak of 77 consecutive profitable trades. For Auld Lang Zyne my dear.

[billyjoe]

Mr. Market,
So you're saying QSII is not like the other medical stocks that ripped me a new you know what in the past couple years.

billyjoe

[bknight]

For once, I have the cash to buy with you.

[Peter Hansen]

I am in QSII at 78.10. According to Vector Vest the leading 12 months earnings per share is $2.14 , slightly higher than Mr. Market's prediction of $1.88 per share which translates into a share price of 111.28.
The fundamentals look sound , and the concept is a good one......but only time will tell!

[jiesen]

great pick, $$MM! I'm in at 77.8!

[mrmarket]

does anyone else like this pick?

[skiracer]

does anyone else like this pick?
I liked LUFK much better. But that doesn't mean that it isn't going to perform. Apparently you like it and that should be enough.

[Dave]

MM, a friend of mine here at work that is a new MM follower used my MS Money screens based on yours and came up with QSII as his first "test" stock about a month ago. He will be very excited to hear that it has actually become a real MM pick. Personally I like this one, and should be able to buy in a week or so after the New Year. My friend is doing well so far, with success buying and selling PRLS and SNHY.

Hope everyone is having a great holiday season!

-Dave

[Adam]

I'm in at 77.7

[spikefader]

does anyone else like this pick?I like the write up, just not the timing.

While the weekly shows booming behavior, which is good, I'm not liking the daily action. Better support down at 60.00-70.00 area, and I'll buy it down there maybe. As I type it's trading down after hours to 75.02 :( Sorry to be the bearer of negative stuff, but just calling it as I see it. Good luck folks and hope I'm wrong.

Chart stuff I see; FWIW;
http://img321.imageshack.us/img321/9484/qsiidec289uz.jpg (http://imageshack.us)

[New-born baby]

I like the write up, just not the timing.

While the weekly shows booming behavior, which is good, I'm not liking the daily action. Better support down at 60.00-70.00 area, and I'll buy it down there maybe. As I type it's trading down after hours to 75.02 :( Sorry to be the bearer of negative stuff, but just calling it as I see it. Good luck folks and hope I'm wrong.

Chart stuff I see; FWIW;
http://img321.imageshack.us/img321/9484/qsiidec289uz.jpg (http://imageshack.us)

Spike,
I am glad you said it--and not me. I don't want to be banned from the MM forum. I agree with you: QSII has lost momo and I look for a further hard pullback through the beginning of next week, at least.
Buy some puts or sell the calls, but one way or another, I'd cover up, boys and girls. I don't think it is going to be pretty.

[spikefader]

Spike,
I am glad you said it--and not me. I don't want to be banned from the MM forum. I agree with you: QSII has lost momo and I look for a further hard pullback through the beginning of next week, at least.
Buy some puts or sell the calls, but one way or another, I'd cover up, boys and girls. I don't think it is going to be pretty.lol MM is so Huge he don't care what I say......~peer around~....does he? lol
I just looked and +QCRMN Jan 70 puts are 60 bucks each, although that'll jump in the morning if price gaps down. But still, for the small cost of admission you give yourself insurance.

[New-born baby]

lol MM is so Huge he don't care what I say......~peer around~....does he? lol
I just looked and +QCRMN Jan 70 puts are 60 bucks each, although that'll jump in the morning if price gaps down. But still, for the small cost of admission you give yourself insurance.

Spike,
I just looked at QSII after hours trading: down another $.31 to $76.10.
If you bought the $85 Jan Put at $9.40, you are just $.50 from being in the money. Rechecked the chart and noticed that QSII finished at support at the close, only to dip below support after hours.

If you already own the stock at less than $78, you can get $3.20 for the $75 Jan call. Sure, than nets you only $78.20 IF QSII is above $75 on January the 20th, and gives you small comfort if the stock plummets to $60, but it beats a kick in the head. On the other hand, the June $75 call nets you $10.00 . . . .

[Karel]

I bought LUFK and QSII, both down now, more or less as expected. $$$Mr.Market$$$ stocks may very well drop a bit before they continue their rise (roaring bull markets excepted). Smarter plays no doubt are possible, but I don't want to sit with my eyes glued to the screen all night.

Regards,

Karel

[The Photon]

Karel I did the same now holding LUFK and QSII

[Dave]

The chartsters hoped they were wrong, and it now looks to me like MM is positive on this one...

So my question is, would chart/technical trading work at all if only a few people used it? My feeling is that daytraders feed off each other using charts, trying to recognize patterns or trends before they are created by people using the same or similar methods. Kind of a chicken or the egg thing...

-Dave

[spikefader]

Dave, buy a stinkin put will ya :D

[spikefader]

The chartsters hoped they were wrong, and it now looks to me like MM is positive on this one...

So my question is, would chart/technical trading work at all if only a few people used it? My feeling is that daytraders feed off each other using charts, trying to recognize patterns or trends before they are created by people using the same or similar methods. Kind of a chicken or the egg thing...

-DaveI probably should explain that comment since you may not know my humor. I'm being light-hearted, but serious at the same time.

Your question is an interesting one, and prompts some thoughts.

As an advanced TAer who understands the deeper limitations and benefits of charting (hope that doesn't sound arrogant), I think you're asking the wrong question. It's not so much if it's valid or which came first the chicken or the egg, but a chart just IS. It's real. It exists. Whether a lot of people follow them or not isn't the point. It is not how many people follow each TA indicator, but it's what is reflected in the chart that is the important thing. Reaction to support and resistances. Charting merely attempts to define where those support resistances are. Charts don't lie. Charts are never wrong, they just communicate was IS until it ISN'T. Anyone looking for a chart that will tell you definately what WILL happen for sure just isn't ever going to find it. It's a futile attempt. Support is support until it isn't and resistance is resistance until it isn't. I have bearish bias on QSII until I don't. It's nothing personal, it's just factual. Charts are very often going to be 'proven' wrong when the lines in the sand they define are crossed by market forces that go beyond the interpretative reflection of the chart.

Honestly and seriously though Dave, insurance with a put for QSII is a very smart thing to do right now. The water is murkey for it and there's shark lurkin in the area. Get to cover and wait for clear water so you can venture forth and play when you know it's safe!

Best to ya.

[skiracer]

What I was curious about is what Dave meant. Was he implying that the TA advocates were hoping that they were right and that the stock would fall like they predicted and prove MM wrong on this one just for the sake of being right. I can see us disagreeing with MM's or anyones pick at any given time but not to WISH that the stock falls just to say they were right and someone else was wrong. Why would any of us here wish for the worst for our compadres. It's just an analysis of what the chart is presenting and their take on it Dave. The position is still not out of the woods but hopefully it will prove anyone in disagreement wrong for the sake and good of everyone here who bought it.

[Dave]

What I was curious about is what Dave meant. Was he implying that the TA advocates were hoping that they were right and that the stock would fall like they predicted and prove MM wrong on this one just for the sake of being right. I can see us disagreeing with MM's or anyones pick at any given time but not to WISH that the stock falls just to say they were right and someone else was wrong. Why would any of us here wish for the worst for our compadres. It's just an analysis of what the chart is presenting and their take on it Dave. The position is still not out of the woods but hopefully it will prove anyone in disagreement wrong for the sake and good of everyone here who bought it.

Ski,
I just just, in my own twisted way, pointing out that every chart and TA sign can point to a certain move, but somehow the opposite can happen. When I see the volitility of today's markets, I sit back and reflect on the system that has been created by discount online brokers. It has opened the market up to a whole new world of daytraders. All of them rely on the same information, so what is the result? If a chart shows one thing, will the expected result follow? What percentage of the time? Will a result only occur if most of the TA's recognize the existing pattern(s) on the chart? It is really very interesting, and a situation that certainly did not exist 20 years ago. I will watch a stock make 20% moves week in and week out, with NO news at all from the company. Heavy volume, light volume, all over, and fun to watch. It is a great example of a system that only exists because of itself. Deep stuff!

Oh, I wasn't implying that anyone wanted the stock to go down, I was just messing around with the guys. I'm sure they knew that though!

-Dave

[spikefader]

Just looked and the +QCRMN Jan 70 puts are 0.30x0.40 while stock price is $77.51.

If price drops 10% back to SUPPORT on the chart (completely possible) you will likely get a 10 bagger (rough guess and opinions welcome) on each put you buy. So for every 5k invested in QSII, say you bought 1 of those puts for $40, then you could reasonably expect to make $360 on the put. If bearish bias is wrong and she flys, you've only lost 40 bucks of the $750 profit that MM's pick is targeting. But if it does tank 10% you'll take a $250 hit for every 5k invested in it. By hedging, the puts will put the entire position green again, i.e. on a 5k position your stock is worth 4750 plus the 400 on the put and you're position is 5150.

You'll actually make $150 on the entire position despite the stock moving 10% against you.

Then at that stage you may want to take the $400 profit on the put and add it to your stock position at support, when it's clear waters. Your average price drops down, and if you like, you can hedge again with an out of the money cheapo put to protect your larger position again. Makes perfect sense to me.

So what does a person with 25,000 bucks invested in QSII do from here? If it were me I'd likely hedge with 5 of those puts for $200 bucks total. What's that? 0.8% of the capital to protect it from the risk of a 10% drop in value. So say she does drops 10% to 70.00, the stock value drops from 25K to $23750, and the puts grow to $400 each or $2000 profit on the 5. You've made $750 bucks, can reinvest that into the stock, and rehedge it with cheaper puts.

Just for fun, I'll track the puts and stock position, and I'll use a sample port to do it.

It should be noted that if price meanders around and doens't move (ha, unlikely for a MM pick; they're either rockets or crashers) then the put premium shrivels and dies like a ripe banana left in the sun. But at least it's good for insurance till expiry in January and you can sleep like a baby at night, knowing that if your hard earned cash that's in MM's latest pick dies then you'll profit from the death.

Best to ya.

[New-born baby]

Spike,
After reading your last post that included mathmathics, logic, and sound reasoning, all I can say is:


"Puts? PUTS?!!??? We don't need no stinkin' puts! :D

Seriously, great reasoning. Thanks!

[Adam]

Thank you MM for the simple explanation of something that was difficult for me to grasp through readings from proir investigations. MM IS HUGE!

[ricofrans]

QSII dropped very hard today... support line at 70?

[New-born baby]

QSII dropped very hard today... support line at 70?

Rico,
It gave a headfake to $79.00, and now is grovelling in the dust of $73.10 for the low. It has found some (I think, temporary) support at $74, but I am looking for a price target closer to $60 in the short run. The point n figure chart says $69.00. We shall see . . . .

[sisterwin2]

To be truthful, I was not ready to for this pick so I did not climb aboard. Then I looks at the chart and was proud that I agree that I see down side before it will make its 15%.. I thank all here for teaching me what I know ( still too little). I thank MM for making me look closer also.

Good luck on the pick all....

[skiracer]

Big down day in light of a big up day. Not good. I think you'll see $70/69 before you see any bounce up. No channel long signal either on the weekly.
Just took a look at the options an I didn't see any bargains there either.

[mrmarket]

Big down day in light of a big up day. Not good. I think you'll see $70/69 before you see any bounce up. No channel long signal either on the weekly.
Just took a look at the options an I didn't see any bargains there either.

What will happen if QSII beats earnings by 50%?

[skiracer]

Well that will be a horse of another color. You know our disciplines are different. I was just looking at the daily and weekly charts and giving an opinion of where I thought it was going over the short term. I know there are alot of people in it because of your lead an I do want to see it do good regardless of what I see in the chart because of that. I could be way off base on my interpretation which is just my opinion and not meant in any non positive way. BTW when does it report earnings? If it does beat consensus by 50% then all of us who looked at it negatively will have our fingers up our asses when it takes off.

[spikefader]

Just took a look at the options an I didn't see any bargains there either.
Those +QCRMN Jan 70 puts that were asking 0.40 traded +88% today :D

[New-born baby]

What will happen if QSII beats earnings by 50%?

MM,
Part of your problem is that Jimmy Eugene Cramer (Mr. Know-it-all) hammered this stock tonight on his program during his "lightning round."

[spikefader]

correction sorry, those QCRMNs traded at 0.85 today, so that's +112.5% lol

[mrmarket]

Well that will be a horse of another color. You know our disciplines are different. I was just looking at the daily and weekly charts and giving an opinion of where I thought it was going over the short term. I know there are alot of people in it because of your lead an I do want to see it do good regardless of what I see in the chart because of that. I could be way off base on my interpretation which is just my opinion and not meant in any non positive way. BTW when does it report earnings? If it does beat consensus by 50% then all of us who looked at it negatively will have our fingers up our asses when it takes off.

Earnings early next month...I was hoping I'd be out of it before then but that does not look likely now.

[skiracer]

Those +QCRMN Jan 70 puts that were asking 0.40 traded +88% today :D

Spike,
I never looked at them early this morning only after closing an haven't really been following the stock. Just saw a post on it late today and took a look. Kind of late now don't you think. Would you buy them now? I don't think I would have bought the Jan 70 puts today anyway. Pretty close to expiration.
Just saw that you had a post on those puts back on 12/29 when they were .30x.40. That would have been a nice play but did anyone take it?

[spikefader]

The numbers have changed somewhat now, and the ideal time would be to have bought them the other day, and you'd still likely be holding them if you were still long the stock. If the stock drops to 60 those will really pay, but the idea is to hedge the stock position that is in doubt, and since those Feb calls are so expensive and the fact that there aren't cheaper ones kind of makes the equation trickier.

I'd probably look at the Febuary calls now I think, but this morning's strength has these Jan ones trading at 0.55, which is getting cheap again, but you know the risk with buying close to expiry out of the money options, they erode very fast. All I know is if I were long the stock, I'd be hedging it. Perhaps the better play now is closer or deep in the money options where there is more volume and more ability to sell them closer to expiry. But that involves more capital than the 1st play.

[skiracer]

My thoughts exactly. To expensive farther out and to close to expiration in close.

[spikefader]

Ideally you want protection rather than thinking of it as a regular entry for a profit play. That reason will make a worried stock holder pay that 'insurance'. Sure, it's only 13 trading days left until expiry. But this stock, just like other MM picks, and ANY stock as you well know has the ability to just fall out of the ugly tree. That's what you're paying that premium for; insurance if it does, which the chart whispers. If the chart were stronger you'd hold it more confidently. And if a holder is well diversified it shouldn't matter if it does fall out of the ugly tree. But for those who may not have the luxury of diversification, who may be overallocating in the hope MM is going to be right again cuz he's so huge then this kind of put insurance is a good thing to have, despite it's seemingly high price. But what's $50 (last trade price) for every 5K invested? 1% of your capital to protect it from disaster. Those puts will look cheap if the stock falls 10% in 5 days, so it's all a matter of perspective, and completely dependent on the amount of risk you want to assign to MM's pick. But for a profit-making play, this isn't the one to be looking at. It makes no sense to try and profit from these puts.

[Adam]

MM, Thats very understandable to be using the puts as protection. However, for the faint of heart it hurts to see your puts up 150% like yesterday. With a $15,000 position I hold 4 $.40 Jan $70 put options. During the downturn the 150% increase in the put value was well below the 5-6% QSII was down. My question is, if I understood your explanation the put value should grow exponentialy and cover the loss of the stock holding, what happens as we near the option expiration, if the stock value is still above 70 but your holding is still at a loss, the options should be worthless, is there an exit point we should look for in this case?

Always lookin to learn! Thank You $$MM$$

[spikefader]

I think you've got a case of mistaken identity Adam lol MrMarket (MM) would probably get a chuckle too.

But to your question! Yes, exponentially is probably a good word. I think you'll find that the closer those puts get to being in the money (i.e. the stock value gets to 70.00) the value will increase more. But I admit I took a guestimate of what they will be worth and HOW many one would need for each 5k position......and you never really know how much they'll be worth cuz it all depends on demand and the volume of them being traded. Options are a very gray area and it takes a genius to know all there is to know. I don't and don't pretend to. But I know enough to make a few dollars on them, and to know when I'm SUPPOSED to be using them. I think you are wise for buying some as insurance no matter what happens; up/down/sideways. I see the risk there and I'm sure others do too.

As to value and when to sell them, honestly that's a tuffy, when there's true fear and people are scrambling to buy puts to hedge THAT's when their value will rocket. Ideally, you want to buy them cheap when no-one wants them and sell when everybody want's them and bid the price up.....it's the people who haven't been tracking the put movement and the stock too well will be the ones just buying at any price, they just want in!

But because QSII options appear relatively thin you want to try and get rid of them with a week to go if the stock doesn't get closer to 70, and consider getting Feb puts if the stock chart is still weak and justifies it.

But so much can happen between now and expiry. MM stocks have been known to drop fast and you'll find that if that happens, having what might appear to be cheap and dwindling to worthless the closer it gets to expiry, a suddenly tanking stock price will rocket those put prices back into value.

And one last thing; if you really want to have the puts equal the drop in the price, then you have to track those puts for a while to get an idea of how they trade. Options specialists can really be manipulative and the market can be fickle, and it's only by watching for a long time that you'll really know. That, plus perhaps talking to an options expert :D You may need more puts than I suggest.

If there's anyone that can add to this discussion please do! If we're gonna speculate on speculation we may as well make it accurate :D haha

[skiracer]

MM, Thats very understandable to be using the puts as protection. However, for the faint of heart it hurts to see your puts up 150% like yesterday. With a $15,000 position I hold 4 $.40 Jan $70 put options. During the downturn the 150% increase in the put value was well below the 5-6% QSII was down. My question is, if I understood your explanation the put value should grow exponentialy and cover the loss of the stock holding, what happens as we near the option expiration, if the stock value is still above 70 but your holding is still at a loss, the options should be worthless, is there an exit point we should look for in this case?

Always lookin to learn! Thank You $$MM$$

I just looked at the Jan. 70 (QCRMN) puts. They were bid .60 asked .85 and last trade was .80 or +.23 today. I'm not sure when they expire this month but at what they are trading at right now (last trade .80) you're +$160 on the puts and - $900 (6% of $15000) on the position. $900 - $160 = $740 which brings your loss % down to around 4.9 % from the original 6%. This was 15 minutes ago now the puts are down to .60 bid and .75 asked with the last trade at .70. The stock was -.14 15 min. ago now is down -.20 and the puts decreased in price also. These options can be strange. Your still up in the puts position and the stock is still moving down. You should probably hold for the time being. This is one reason I don't like to buy the options to close to expiration. Makes it harder to exit quickly with your gains. Remember this experience and how it went as it will help you next time.

[Adam]

Thanks Spike(sorry 4 the miss Identity, I hope it's a compliment to you)
Thanks for the #'s Ski.
If I understood you right I may be a little light on the put position? I'm pretty new at this computer chat and trading. My broker was making more from my money than I was had to give that up. I'm not new to the market but I have been trying to study and work with options. This position is my first put. I belive Expiration is two weeks from friday so I'll have to watch next week for a good sell position for the Jan puts as well as an opening for a good Feb put position. I have been working and watching several option positions as well as the ones I own. The price fluctuation over the holiday weekend made many positions very appealing. Hesitent to jump in and also limited available capitol kept me from capitolizing on the positions I was watching. I watched two separate options down 30-40% on fri only to return all strength by today. Should I be upset? I know and expect the volitility. Both positions I own and was comfortable knowing their strength and the options are far enough out not to cause immediate worry. Many say not to average down. In hindsite the answer is obvious. If you can put yourselves in that position, whats the call knowing we were dealing over the New Years weekend and I expected to see the light down trading.

Question: Open intrest on an option. Is that defined as how many are involved in the bidding at the time or the number of positions held. Is more open inrest = more liquidity of the option? Or am I just completely OFF?

Any comments are greatly appreciated!

[spikefader]

Thanks Spike(sorry 4 the miss Identity, I hope it's a compliment to you)
Thanks for the #'s Ski.
If I understood you right I may be a little light on the put position? I'm pretty new at this computer chat and trading. My broker was making more from my money than I was had to give that up. I'm not new to the market but I have been trying to study and work with options. This position is my first put. I belive Expiration is two weeks from friday so I'll have to watch next week for a good sell position for the Jan puts as well as an opening for a good Feb put position. I have been working and watching several option positions as well as the ones I own. The price fluctuation over the holiday weekend made many positions very appealing. Hesitent to jump in and also limited available capitol kept me from capitolizing on the positions I was watching. I watched two separate options down 30-40% on fri only to return all strength by today. Should I be upset? I know and expect the volitility. Both positions I own and was comfortable knowing their strength and the options are far enough out not to cause immediate worry. Many say not to average down. In hindsite the answer is obvious. If you can put yourselves in that position, whats the call knowing we were dealing over the New Years weekend and I expected to see the light down trading.

Question: Open intrest on an option. Is that defined as how many are involved in the bidding at the time or the number of positions held. Is more open inrest = more liquidity of the option? Or am I just completely OFF?

Any comments are greatly appreciated! heh, no prob, yep a compliment indeed. I wish I had those 19" biceps lol

I think averaging into an option position often makes sense, especially where the downside risk is so small; i.e. my GOOG calls. The position started off poorly but that was cool because the downside was completely limited, as were the adds at lower prices to bring my total average down. Sure, the $s risked increased, but it was still within limits I'd set. Now it's done impressive things and it's making money. Options can be good to average into weakness for the right stock! GOOG is one of them.

Just did some research on Protective Puts cuz I don't want to steer you wrong. Online guides I've read from cbot recommend buying 1 "in the money put" for every 100 shares owned. It gets complicated when you start buying out of the money options that have the benefit of being cheaper and require more of a move to get in the money. The fact that they are so cheap is the incentive, but you've got to be prepared to accept the risk of your premium eroding fast the closer to expiration (3rd Friday of the month). So with out of the money puts, it's pretty obvious that 1 put per 100 shares isn't enough.....and double that recommendation hasn't YET been enough to offset the price drop cuz they are out of the money still.

So now do you buy more puts to hedge, and if so which month, and which strike, or do you go for more fancy plays like trying to get out even with a 'repair strategy' as described by the second link. But that second one is getting pretty intricate and involves selling calls in a margin account.

http://www.cboe.com/Strategies/EquityOptions/ProtectivePuts/Part1.aspx

http://www.cboe.com/Strategies/EquityOptions/StockRepairs/Part1.aspx

Read those, and do some more options reasearch. There are plenty of free resources if you google long enough. It might be helpful to post a question in an option forum where people love talking about this stuff and have much more experience and knowledge than I.

Anyone on this board want to throw into this discussion, please do. It's an interesting one and I'm sure there are other thoughts out there about it. This stuff can only help MM followers who don't necessarily diversify like MM does.

If it were me in your shoes now Adam I'd seriously consider your risk/reward and your plan and make sure you're within limits and tolerability. 4% loss (if ski's calculations are right) is still an acceptable loss in the world of professional traders and accountability. Work out what your tolerance is, and draw the line in the sand to exit, or the time when you execute your option repair strategy or whatever. Risk management and selling a losing position and taking the hit is very hard to do, everyone feels the same. Plenty of MM picks recover nicely from falls, and this one probably/might/should/could will too. But bottom line is we hedge for a reason and many use stop loss orders for a reason; protection of undiversified capital. MM is diversified with his picks and has resolve as to his total port risk. Make sure YOU are too. Make your plan, execute YOUR plan, and be happy with yourself no matter if the stock makes you look/feel foolish or like a genius.

Me? I'd probably sit tight on those 4 puts until a week to go and until that chart gets better, i.e. a channel long day with nice intraday bullish reversal pattern or something like that. If that happens, sell those puts for what you can get and if that nice new support/buy play fails then consider a fresh hedge again with Feb 70s. If the pattern holds, then invest any put profits on a drop back into the stock to lower your average.

May MM's QSII pick rocket for yall. I hate seeing them drop. Makes me feel ill :(

Oh, and your open interest question: Open interest is the total number of option contracts that are currently open, have been traded but not yet liquidated (http://www.investopedia.com/terms/l/liquidation.asp) by either an offsetting trade or an exercise (http://www.investopedia.com/terms/e/exercise.asp) or assignment (http://www.investopedia.com/terms/a/assignment.asp).

[mimo_100]

Thanks Spike(sorry 4 the miss Identity, I hope it's a compliment to you)
Thanks for the #'s Ski.
If I understood you right I may be a little light on the put position? I'm pretty new at this computer chat and trading. My broker was making more from my money than I was had to give that up. I'm not new to the market but I have been trying to study and work with options. This position is my first put. I belive Expiration is two weeks from friday so I'll have to watch next week for a good sell position for the Jan puts as well as an opening for a good Feb put position. I have been working and watching several option positions as well as the ones I own. The price fluctuation over the holiday weekend made many positions very appealing. Hesitent to jump in and also limited available capitol kept me from capitolizing on the positions I was watching. I watched two separate options down 30-40% on fri only to return all strength by today. Should I be upset? I know and expect the volitility. Both positions I own and was comfortable knowing their strength and the options are far enough out not to cause immediate worry. Many say not to average down. In hindsite the answer is obvious. If you can put yourselves in that position, whats the call knowing we were dealing over the New Years weekend and I expected to see the light down trading.

Question: Open intrest on an option. Is that defined as how many are involved in the bidding at the time or the number of positions held. Is more open inrest = more liquidity of the option? Or am I just completely OFF?

Any comments are greatly appreciated!


Hello Adam,

Here is a link to a free options calculator using the Black-Scholes method. I have no experience as to its accuracy, so beware.

http://www.blobek.com/black-scholes.html


We probably need to move this discussion to an "Options" thread if anyone wants to continue.What do you think?

Tim

[New-born baby]

Hello Adam,

Here is a link to a free options calculator using the Black-Scholes method. I have no experience as to its accuracy, so beware.

http://www.blobek.com/black-scholes.html


We probably need to move this discussion to an "Options" thread if anyone wants to continue.What do you think?

Tim

Mimo,
Why don't you fire up the options thread? I'd enjoy it, and I am sure others would profit as well.

[sisterwin2]

Mimo,
Why don't you fire up the options thread? I'd enjoy it, and I am sure others would profit as well.


I would love to have a thread on options...... I would run it except I am very green on the subject..

[mimo_100]

Mimo,
Why don't you fire up the options thread? I'd enjoy it, and I am sure others would profit as well.

NBB and sisterwin2,

OK, I will fire one up. Just be aware (as you can see from my number of posts) that, unfortunately, I cannot spend as much time here as I would like, due to other obligations. But I will do my best to moderate the thread.

Thanks to everyone for the interest.

Tim

[spikefader]

Yep, good idea for that thread.

[Adam]

I'll see you all there!

[mimo_100]

I decided to include all derivatives, not just options. I had a temporary cerebal anomaly, and hopefuly this will not scare everyone away.

Here is the link to the "NEW OPTIONS" thread.

http://www.mrmarketishuge.com/showthread.php?t=1109

[Adam]

Here is a link to a free options calculator using the Black-Scholes method. I have no experience as to its accuracy, so beware.

[http://www.blobek.com/black-scholes.html[/url]



Tim, I'm must be half a moron cause I had no Idea what I was looking at. I'll have to hit it when I have more time. These people here actually expect me to work. I guess thats what happens when your V.P. I personaly think the only thing I should be doing is making sure everyone else is working while I chat on the MM forum. The boss disagrees! He just don't know MM forum yet.

[mimo_100]

Here is a link to a free options calculator using the Black-Scholes method. I have no experience as to its accuracy, so beware.

[http://www.blobek.com/black-scholes.html[/url]



Tim, I'm must be half a moron cause I had no Idea what I was looking at. I'll have to hit it when I have more time. These people here actually expect me to work. I guess thats what happens when your V.P. I personaly think the only thing I should be doing is making sure everyone else is working while I chat on the MM forum. The boss disagrees! He just don't know MM forum yet.


I think you were discussing the QSII Jan 70 puts above.



In the calculator, I put 70 for the strike price, $75.30 in the current price (2:20 PM ET today), 14 in the number of days to expiration, 38 in the volatility %, and 4% in the annual interest rate.



The calculator said that the theoretical price of the puts was 0.5464 and the calls was 5.9537. The actual price quoted at NASDAQ.com was $.45 for the puts and the calls were $5.90.

[skiracer]

Here are two free web seminars offered by the Chicago Board of Options Exchange (CBOE). Go to www.cboe.com and you'll be able to get to the free seminars registration page from there if you want.

http://img447.imageshack.us/img447/4111/optionssem6ra.jpg (http://imageshack.us)

http://img447.imageshack.us/img447/8632/options20so.jpg (http://imageshack.us)

[Adam]

Thanx Tim. But for the novice where did you get the 38% volitility and the 4% annual intrest rate from?

If I understand correctly these calculations can be used to predict the # of puts necessary to provide insurane if the stock drops to a certian level.

In opposite it can be used to calculate possible call option values as the stock value changes.

[Adam]

Here are two free web seminars offered by the Chicago Board of Options Exchange (CBOE). Go to www.cboe.com and you'll be able to get to the free seminars registration page from there if you want.

http://img447.imageshack.us/img447/4111/optionssem6ra.jpg (http://imageshack.us)

http://img447.imageshack.us/img447/8632/options20so.jpg (http://imageshack.us)


I've heard of that site before and thank you for pointing it out again. I'm just struggling to find time to eat lunch and do my job. I can only hide from our emplyees for so long before something happens and everyone got thier thumbs up thier ass until they find me.

I will make time to invest in my education. Your input is much appeciated.

Adam K

[sisterwin2]

Adam.... I went thru some of the tutorials and learned alot... I am a bit slow and will go thru them again. I do not know what you do for a living but I could never get this while at work. I spend about 1/2hr each nite on it then treat myself afterwards by coming here for any new post. I just cant wait till I learn enough to take a dip.

Good luck

[Adam]

Hello Dena, Yes your right most people don't have time for this at work but I'm lucky to be in my position. I have read quite a bit on options and been involved with the market for a while. I also spend several hrs each night to view the forum and study for my upcoming trades as they present themselves. My impatience is usualy what hurts me. Take your time, when the waters right dive in, but allways double check your not diving into an inch of water and 10 feet of mud. That can happen when your impatient like me. I've been up and down in the options positions I'm in. Can't take your eye off you position because of the extreme volitility. Also, options are not for the faint of heart.

The more I talk to the people at this forum the more I learn.

Happy trading!

Adam


P.S. The only thing about work is I only have time to keep my eye on my positions. I've lost much money due to my work keeping me from my computer. If the old man fires me it will just give me more time to make my money make more money. All I do is find ways to constantly make our company more money and entertain clients. While the boss's pockets get fatter he won't care what I do. One must look after thier own interests.

[skiracer]

Hello Dena, Yes your right most people don't have time for this at work but I'm lucky to be in my position. I have read quite a bit on options and been involved with the market for a while. I also spend several hrs each night to view the forum and study for my upcoming trades as they present themselves. My impatience is usualy what hurts me. Take your time, when the waters right dive in, but allways double check your not diving into an inch of water and 10 feet of mud. That can happen when your impatient like me. I've been up and down in the options positions I'm in. Can't take your eye off you position because of the extreme volitility. Also, options are not for the faint of heart.

The more I talk to the people at this forum the more I learn.

Happy trading!

Adam


P.S. The only thing about work is I only have time to keep my eye on my positions. I've lost much money due to my work keeping me from my computer. If the old man fires me it will just give me more time to make my money make more money. All I do is find ways to constantly make our company more money and entertain clients. While the boss's pockets get fatter he won't care what I do. One must look after thier own interests.

Adam,
You had better keep your nose to the grindstone at work and keep that day job. If you then have enough stamina to stay up all night studying these stocks then do it but don't let that take away from your day job or you'll really be out in the cold. You must keep that cash flow coming in because the myth of making a living an supporting a family is just that a myth. One way to keep from having to watch your positions all day is to learn where to strategically place your stops and then have enough faith in them to leave them. After getting stopped out enough times you will slowly adapt a strategy that works to some reasonable degree of satisfaction. But you will never stop from getting stopped out on occassion. It's all part of it. You stated your biggest problem, patience and cold hard insensitivity. It only comes with hard work and holding steadfast to your discipline and plan. Work on that because it is one of the most important factors in all of this. Maybe you should re-evaluate that options position. If it is taking up so much of your time it's controlling you instead of you controlling it. It might not be worth what it's taking to stay in it.

[Adam]

Your right Ski, I have been stopped out of several positions just to watch them rebound then some. I have learned to trust my stops. The losses where mainly from getting to know trading by computor. I chalk those up to learning lessons. My day job is just that(family buisness also) it pays well as I am the VP of our evironmental contracting company. However, I hate the line of work and can't wait till I position myself out of the company. I deal in realestate and am working on increasing my cashflow through passive methods rather than the 9-5. You can't take some of my comments to litteral. As VP my job is damage control and increasing profitability. Since my return to the company 5 years ago we have doubled in size and although my father doesn't admit it to me untill I drag it out but profitability has increased also. I only hope to, oneday, be free of that 9-5 because the truth is it not just the 9-5 its my life and it never stops. I just try to put the smartest and best people beside me and let those who do it best, do it.

P.S. Today my crew proceeded to crack a foundation of a house we had held up for two months to remove contamination from beneath the residence. My job, appease the screaming client, tell the project manager and the compaction engineer that they caused this due to thier direction of the work that went directly against what I explained was supposed to be done. Everyone wants to blame the contamination on us and take it out on me. I barely went to highschool, except for lunch and gym. In the mean time I have to deal with these COLLEDGE HIGHLY EDUCATED morons constantly! Can you understand my comments now?

[Adam]

Ski,

Regaurding the options positions. Yes your right, those positions are the ones I usualy keep my eyes on closest. The majority are long term options so I don't have to watch all that close at all time. I think I enjoy it. Definately more than my job. Unless of course I'm entertaining clients at a Go Go bar or playing golf. By summer I think I will be more comfortable with my positions and have stops orders in place. Currently I'm not using any stop orders on my option positions. Is it common practice to put stop orders on options?

[skiracer]

Your right Ski, I have been stopped out of several positions just to watch them rebound then some. I have learned to trust my stops. The losses where mainly from getting to know trading by computor. I chalk those up to learning lessons. My day job is just that(family buisness also) it pays well as I am the VP of our evironmental contracting company. However, I hate the line of work and can't wait till I position myself out of the company. I deal in realestate and am working on increasing my cashflow through passive methods rather than the 9-5. You can't take some of my comments to litteral. As VP my job is damage control and increasing profitability. Since my return to the company 5 years ago we have doubled in size and although my father doesn't admit it to me untill I drag it out but profitability has increased also. I only hope to, oneday, be free of that 9-5 because the truth is it not just the 9-5 its my life and it never stops. I just try to put the smartest and best people beside me and let those who do it best, do it.

P.S. Today my crew proceeded to crack a foundation of a house we had held up for two months to remove contamination from beneath the residence. My job, appease the screaming client, tell the project manager and the compaction engineer that they caused this due to thier direction of the work that went directly against what I explained was supposed to be done. Everyone wants to blame the contamination on us and take it out on me. I barely went to highschool, except for lunch and gym. In the mean time I have to deal with these COLLEDGE HIGHLY EDUCATED morons constantly! Can you understand my comments now?

I didn't mean to come off as lecturing you which I probably did an I sorry for that. It takes lots of money to live and accumulating it while your young is key in having it to make more later on. You're lucky in that you have something going for yourself to just step into. It seems that you have also had a positive effect there so it's been equitable for both sides. If you hate it so much you should leave but to where and someplace where the bucks are as good could be a problem. This trading thing is at best an educated gamble. The patience thing is key coupled with being a highly disciplined individual in control of one's facilities and emotions is the only road to being successful on some level. I think you hit the nail on the head with your statement regarding your job is damage control and increasing profitability. If you can get as much experience doing that and running that business while maintaining some increasing degree of profitability at the same time you are subtly becoming the person the you need to be in being successful at this trading thing. Just staying in an dealing with any situation you hate and being good at it while running an getting other intelligent people to understand your goals and do what you need them to do will develope those characteristic traits. You're just blinded by the surface factors because of your dislike for it and not realizing what subtle strengths are being developed by doing it as well as you apparently say you are doing it.
Another job or career might be initially more satisfying but in the end you're still going to have to be dealing with the same types of people and the same problems to deal with and solve. Nothing is a bowl of cherries except if you make it one.
It takes patience to develope patience. Dealing with things you hate and being good at it is a good place to start. Good luck and no charge for this session.

[Adam]

I enjoyed your lecture. I"m sorry if my coment of educated morons offended you I'm sure it affended someone(just a bad day). No offense taken but I have older siblings who would love to be in my position it wasn't stepped into. My return to the company was after our joint venture company went under. To start and fail a company at 18 teaches a young boy some hard lessons. After recovering my self confidence I returned to start at the bottom of my fathers company. I'm 28 now. I love the stock market and have technicly invested for 18 years. I was run over by a boat at 9yrs and had a small settlement = once i was like old enough to ask she whould show me statements from Dean Witter and tell me about it. Her father was big in the market. My poke at the highly educated was because somewhere in that education they forget to teach something like simple financial management and how money is made. Then somewhere in between vision gets norrow and common sense is lost? Of course I can say stuff like Townships, countys, and state, are my biggest problem, noone cares to much about helping you. They usualy are restricting or fightng improvements. I welcome any lecture or commentary into my thinking. I'm vested in many intrests in which i'd love to talk of for constructive criticism. See, now for that information I preffer to look to the best in that proffesion, no pejudice for the highly educated just the singular visioned and lacking of common sense. I'm happy to have found the best advice comes from them. The vision and decision is yours.

Your commentary is always welcome!

By the way what is patience? I know it as my biggest enimy it drives me crazy. Do you have time for patience when you have to much work to ever get it done.

[skiracer]

I enjoyed your lecture. I"m sorry if my coment of educated morons offended you I'm sure it affended someone(just a bad day). No offense taken but I have older siblings who would love to be in my position it wasn't stepped into. My return to the company was after our joint venture company went under. To start and fail a company at 18 teaches a young boy some hard lessons. After recovering my self confidence I returned to start at the bottom of my fathers company. I'm 28 now. I love the stock market and have technicly invested for 18 years. I was run over by a boat at 9yrs and had a small settlement = once i was like old enough to ask she whould show me statements from Dean Witter and tell me about it. Her father was big in the market. My poke at the highly educated was because somewhere in that education they forget to teach something like simple financial management and how money is made. Then somewhere in between vision gets norrow and common sense is lost? Of course I can say stuff like Townships, countys, and state, are my biggest problem, noone cares to much about helping you. They usualy are restricting or fightng improvements. I welcome any lecture or commentary into my thinking. I'm vested in many intrests in which i'd love to talk of for constructive criticism. See, now for that information I preffer to look to the best in that proffesion, no pejudice for the highly educated just the singular visioned and lacking of common sense. I'm happy to have found the best advice comes from them. The vision and decision is yours.

Your commentary is always welcome!

By the way what is patience? I know it as my biggest enimy it drives me crazy. Do you have time for patience when you have to much work to ever get it done.

Study your last statement. Solving that equation is what separates the wheat from the chaff. The killer instinct comes from being able to sit and wait until the parameters come to within your guidlines and then the time is yours.

[mrmarket]

I love you guys but can we talk about QSII here?

[Adam]

No problem MM

Those 70 Feb QSII puts are looking a little expensive for insurance. How are your feelings through earnings? Are those HUGE bicepts gonna be overly tensed up or we fealing strong and relaxed?

What kind of meat do we have here???..LOL

[mrmarket]

No problem MM

Those 70 Feb QSII puts are looking a little expensive for insurance. How are your feelings through earnings? Are those HUGE bicepts gonna be overly tensed up or we fealing strong and relaxed?

What kind of meat do we have here???..LOL

If they miss, I'm hosed. But why would they miss?

[Adam]

If they miss, I'm hosed. But why would they miss?


who knows they dont pre-release info if I remember right. I'm with you for the ride so lets see it move. And by the way. I hate insurace I think its strangling possible good young companies from suceeding.

$MM$ always the finest meets and cheeses.

P.S. Can you comment on LKQX i'm up 17% and am thinking of selling into this strength. I had mixed reviews around the forum.

[spikefader]

I love you guys but can we talk about QSII here?lmbo! .

[skiracer]

When is the next earnings release? I was just looking at the Feb. 80 calls (QCRBP) @ 2.25 bid and 2.70 asked with last trade @ 2.80 and the March 80 calls (QCRCP) @ 4.20 bid and 4.50 asked with last trade @ 4.10. If the earnings are good to great it would be nice to have a few contracts of either. The Feb. 80's have 42 days to expiry and the March 80's have 70 days to expiry. The stock showed some strength yesterday. MM, when is the earnings release scheduled? Would be worth watching to see what it does today.

[Adam]

Hey Ski, Like that QSII call option If the eaenings are in favor one could pick up a little extra for the money. I remeber hearing earnings are soon right?

[owenrm]

QSII has historically released earnings in the last week of January. However, there are two posts on the YAHOO board that mention an early February release. Speaking of the YAHOO board, there is one message that will be of particular interest to MRMARKET FANS who are QSII holders:

http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4687052&tid=qsii&sid=4687052&mid=6681

I bought in a 77.99 with a protective JAN 75 PUT. I sold at 75.76 and closed the option (for about $200 loss). After seeing Friday's bounce I may have been hasty... but I need cash to buy into GOOGs rally.

[jiesen]

QSII has historically released earnings in the last week of January. However, there are two posts on the YAHOO board that mention an early February release. Speaking of the YAHOO board, there is one message that will be of particular interest to MRMARKET FANS who are QSII holders:

http://finance.messages.yahoo.com/bbs?.mm=FN&action=m&board=4687052&tid=qsii&sid=4687052&mid=6681



yep, yep. that would be me!

[New-born baby]

QSII

Has had six down weeks in a row. Most recently it twice touched the $73.10 support before recovering. If QSII touches it a third time, I don't think it will hold. The point n figure says the bearish target is $67. The STOs all say the downtrend will continue. Looks pretty strong along the $70 support. I bet money could be made buying $80 Jan PUTS. Typically they are only .50 from being profitable. My play would be to buy the put, and when the stock drops, buy the stock and exercise the Put. The spread is too wide (imho) to just sell your put.

I am not saying this stock isn't going to reach MM's target; but I am saying the chart is still bearish. And as our friend Spike says, "It is what it is until it ain't." Ain't that beautiful?

http://img381.imageshack.us/img381/5008/chart12li.gif

[daskro]

It takes patience to develope patience. Dealing with things you hate and being good at it is a good place to start. Good luck and no charge for this session.

Touche, that's how I got my eagle scout badge.

[Dave]

QSII making a nice recovery and pressing onward! This is the first MM pick I have been able to buy in quite a while, so that alone should make it hit 15% within, say 12 more trading days?

-Dave

[New-born baby]

QSII making a nice recovery and pressing onward! This is the first MM pick I have been able to buy in quite a while, so that alone should make it hit 15% within, say 12 more trading days?

-Dave

Dave, did you see the option chain on this monster? They'll pay you $10.30 to buy it from you at $80.00 in June, 2006. Today's price is currently $80.27, so that's a nice big piece of change for 5 months of holding.

[marc_ely_invest]

If you think QSII is looking good... did you see how well LUFK has faired? I'm up 16.4% in two weeks. Fantastic pick.

Marc

[Adam]

If you think QSII is looking good... did you see how well LUFK has faired? I'm up 16.4% in two weeks. Fantastic pick.

Marc
Hey Marc, I'm right behind you at 16.35%

[New-born baby]

Hey Marc, I'm right behind you at 16.35%

Great going, guys. Now protect the profits . . . . PnF chart had a target of $57, and she reached it.

[mrmarket]

Hey Marc, I'm right behind you at 16.35%

Many of you know I generally avoid picking energy related companies due to the potential conflict of interest it may exude. Having said that, LUFK was so strong a play I just had to show it in my top 5. Congrats guys.

[Runner]

Here is where I thought the short play was on QSII. It gaps down (sign of weakness) and runs sideways (A). Could not fill the gap (B) take it short under low @ (B) take your 10% profit and head for the hills.
http://img381.imageshack.us/img381/4097/qsii5av.png (http://imageshack.us)

[mrmarket]

Look at that little monkey go....

[billyjoe]

That's a good Howard Cosell.

billyjoe

[Peter Hansen]

Look at that little monkey go....


Screw those "Gorilla Trades" You are the KING KONG Of all the Gorillas! QSII should hit 15% soon..........it does not seem to be "monkeying" around LOL ! I never really made any bananas with the other Gorilla!

[The Photon]

MM the King of the Jungle top five since 12.27.05 approx entry

AMTD 24 today 25.7 + 7.1%
EOG 73 78.38 + 7.4%
GIL 41.5 45.5 + 9.6%
LUFK 50 58.96 +17.9%
OSII 78 83.10 + 6.5%

amazzzzzzzzzzzzzzin -

[Olegeezer]

Great stuff......... but think Luf at top :???:

[The Photon]

welcome to the board olegeezer -

[Karel]

And that is 15% for LUFK! Time for the Happy Snoopy Dance again, and a great big thank you to $$$Mr.Market$$$!

[The Photon]

I with you Karel, 16% and a big thank you to MM - the greatest stock picker on the planet -- !!!! yeeeeeeeeeeeHAAAAA! - LUFK sold !!

[jeffbook]

Many of you know I generally avoid picking energy related companies due to the potential conflict of interest it may exude. Having said that, LUFK was so strong a play I just had to show it in my top 5. Congrats guys.

About the time you went with HOLX, I chose LUFK. After it topped 15% last week, I reran my analysis, LUFK was still the top pick, so I am holidng on for a 30% gain.

Also bought QSII in late December after reading the write up and running ny screens and analysis.

Totally understand about your potential conflict, but I do appreciate seeing really good energy stocks make your top 5 even if you don't feel you can buy these securities.

[Adam]

About the time you went with HOLX, I chose LUFK. After it topped 15% last week, I reran my analysis, LUFK was still the top pick, so I am holidng on for a 30% gain.

Also bought QSII in late December after reading the write up and running ny screens and analysis.

Totally understand about your potential conflict, but I do appreciate seeing really good energy stocks make your top 5 even if you don't feel you can buy these securities.


Hey Jeff

How are you? I'm holdin same as you took 15% + on HOLX (thanx $$MM$$) still up 17% on LUFK and am holding for now.

[Adam]

Look at that little monkey go....

Where'd that monkey go? he fall down or somethin?...lol

[Websman]

Look at that little monkey go....

TICK......

[Adam]

LUFK still goin up on a down day!!!

[Adam]

Is anyone watching QSII? Can't believe there are no comments!

$$MM$$ is huge!

[mrmarket]

Is anyone watching QSII? Can't believe there are no comments!

$$MM$$ is huge!

Who will get there first? QSII or RIO...?

[mrmarket]

They declared a stock split which explains the price action. No manager in his right mind will split a stock right before earnings if they are going to miss their numbers...

Looks like QSII will be HUGE for sure.

[jiesen]

Who will get there first? QSII or RIO...?

My guess is QSII will:

http://finance.yahoo.com/q/bc?s=QSII&t=5d

It still has a strong upswing going for it- RIO seems to have petered out. (for now) Who knows, though? Probably both will hit within a week or so.

[spikefader]

QSII has good potential to be huuuuuuuuuge when it gets over this price resistance.

In hindsight, that chart I posted on page 1 of this thread has 'c' in the wrong location. It was never actually confirmed as 'in', and I didn't label that correctly. But 'c' later failed momentarily anyway I see so it matters not.

Happy for you guys that it's worked through the chart uncertainty!! Huge picks have a habit of doing that I guess :D

http://img462.imageshack.us/img462/2159/qsiijan313ed.jpg (http://imageshack.us)

[jiesen]

My guess is QSII will:

http://finance.yahoo.com/q/bc?s=QSII&t=5d

It still has a strong upswing going for it- RIO seems to have petered out. (for now) Who knows, though? Probably both will hit within a week or so.

I guess I was wrong, as RIO is now trading above $$MM's target of 50.65!

[m43420]

mr. market is da man!!!!!!!!!!!!!
Waiting for your next pick, anxiously.

You are HUGE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!

[skiracer]

I cannot deny the fact that the guy is friggin hugh. At first I had my doubts on this one but he just keeps pumping them out. Another nice one Ernie.

[Adam]

He's so HUGE It"ll take a train wreck to stop him! QSII Already up my 15%

$$MM$$ is huge!

Can't wait to see what the next pick is!!!!

[jiesen]

Just got out of QSII for $90. Another amazing pick by $$MM. Didn't I say this would be winner #79 by the end of the week?

Thanks for this stupendous pick, $$MM! You are HUGE! The meats and cheeses are all yours.

[Karel]

Wonderful, wonderful, it is raining money! Out at 90.08.

$$$Mr. Market$$$ did it again! He is

HUGE !!!

Regards,

Karel

[mrmarket]

guess I was napping..I missed it.

[hilss]

I simply can't believe my eyes!!!! UNREAL!!!

[spikefader]

guess I was napping..I missed it.How come you don't use limit orders again? I'm sure you've been asked why before; just don't make sense. It's like the lottery; ya gotta be in it to win it dude lol One day you might get an afterhours spike to your order 6 months before regular hours trading gets there. Not to mention, a spike up to your price may get sold and it's the top for another 6 months or forever lol. I hate to be critical of a genius, but duuuuude! limit orders are moltogoodo! heh

[mrmarket]

How come you don't use limit orders again? I'm sure you've been asked why before; just don't make sense. It's like the lottery; ya gotta be in it to win it dude lol One day you might get an afterhours spike to your order 6 months before regular hours trading gets there. Not to mention, a spike up to your price may get sold and it's the top for another 6 months or forever lol. I hate to be critical of a genius, but duuuuude! limit orders are moltogoodo! heh

I don't know...I guess it's the same reason I like watching the football games I bet on.

[mrmarket]

oops...it it my target again and I didn't get to sell it. Now earnings are going to come out and it will crash. Am I a loser or what?

[Gatorman]

oops...it it my target again and I didn't get to sell it. Now earnings are going to come out and it will crash. Am I a loser or what?
Since it hit your target at least twice, I would consider it a double winner.
You met your goal, sell it now and move on to the next winner.

[New-born baby]

oops...it it my target again and I didn't get to sell it. Now earnings are going to come out and it will crash. Am I a loser or what?

It's just like I told Jiesen: you are a 100% stock picker, and a 91% stock seller. :D The worst part about it--apparently you don't need the money--is that all us MM hanger-on types miss out on your next data dump. :( That alone is enough to turn the US economy down! For the sake of the good old USA--please use limit orders :D

[spikefader]

MM,
My TA shows a strong case that QSII is going to 100 in the weeks ahead, so don't worry too much.
But I agree that you should be using limit orders.

[mrmarket]

I promise if it opens above my target tomorrow that I will sell it (if I remember).

[sisterwin2]

I promise if it opens above my target tomorrow that I will sell it (if I remember).


This made me feel better......... I have missed my target on cib and RIO due to not looking and no stops... I lie to myself and say "I need to hold it for a Yr." But I know I am lying to myself.

I do admire you.

[mrmarket]

This made me feel better......... I have missed my target on cib and RIO due to not looking and no stops... I lie to myself and say "I need to hold it for a Yr." But I know I am lying to myself.

I do admire you.

for my stock picking or for my pecs?

[diogenes]

I lie to myself and say "I need to hold it for a Yr." But I know I am lying to myself.


Why do you want to hold it for a year?

[Karel]

Especially since it is now over 91 and even $$$Mr.Market$$$ might have sold it? :D

Regards,

Karel

[sisterwin2]

for my stock picking or for my pecs?


Ok, now my face is red. Let me not lie, BOTH.

[sisterwin2]

Why do you want to hold it for a year?

I may be completely wrong but this is why. I do not have alot of free cash to put into stocks. When I figure out what I pay for taxes if I sell before the yr. I end up maybe 200 ahead. When I am able to hold for the yr the tax is alot lower. Am I wrong?

[sisterwin2]

Let me clarify a bit more. Right now I am up 31.39% on CIB, RIO 24.06%. My goal was 45% on CIB and 35% on RIO. I didnt put stops in so I lost my goal. If I am wrong on the tax thingy, let me know.

[mrmarket]

Just a little behind in my posts today. I got out at the gun this morning.

[lemonjello]

Have to agree. Tightened my stops but still holding. QSII barely budged on a very bad day for a lot of high flying stocks.

MM,
My TA shows a strong case that QSII is going to 100 in the weeks ahead, so don't worry too much.
But I agree that you should be using limit orders.

[ParkTwain]

I may be completely wrong but this is why. I do not have alot of free cash to put into stocks. When I figure out what I pay for taxes if I sell before the yr. I end up maybe 200 ahead. When I am able to hold for the yr the tax is alot lower. Am I wrong?


As for when to take a profit, I would encourage you to think more in terms of "take what the market will give me" instead of letting tax considerations drive your decisions. For two reasons:

(1) Identify what your profit goal is in a given position, then use a trailing stop to help you get as close to that goal as the market allows. Assuming you are watching a winning-trade-in-the-making that is now moving between support and resistance areas, you have to have a sense of the stock's volatility to know where to place the stop. Regardless, the closer the pps is to your goal, the tighter your trailing stop should be. Update your notes every day or two to be aware of the trend line(s) (you should draw more than one, over both shorter and longer timeframes) that your winning stock's pps is tracing as it rises.

(2) A big part of why you're in the markets is to develop your own approach to finding stocks to trade profitably. You need to find a way to repeat your successes. The experience of the markets you gain over time is the biggest helper in this process, not to mention the important process of identifying your own preferred trading style. When you know you can repeat your success, you will be more willing to take a profit that might be less than your "best scenario" goal.