Covered Call Gigamedia

After yesterday I thought my Aug $12.50 call on Gigamedia GIGM would expire out of the money. Today with the market up, it is trading just at to slightly in the money.

My plan with GIGM is to hold the stock for the longer term (see my post at Seeking Alpha) so I did not want it called away. I bought back the call and sold the Oct $15 call for a net credit of $.45. I am trying to manage this position to make some income selling calls while continue holding the stock for growth. We will see how the plan works.

Gigamedia Quarterly Earnings

I have posted a review on Gigamedia’s quarterly earnings conference call from this morning.

Go take a look!

Sold long calls on Gigamedia

Last week I bought some Sep $10 calls on Gigamedia GIGM ahead of todays earnings release. The earning came out OK and the stock went to $12+ and I sold my calls for $2.55 this morning. Nice to make a little money in this market.

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Bought Calls on GIGM

Since February I have owned and written calls on Gigamedia GIGM. Recently the stock has taken a serious tumble, losing about 1/3 of its value. This is a very profitable and growing company and I see no reason for the price fall except market fears and the current pull back in both the U.S. and Taiwan markets.

The company has an earnings release scheduled for next Tuesday, August 14. Today I bought some Sept $10 calls for $.95. An earnings surprise to the upside should give a nice boost to the stock price.

Projected earnings are $14 per share for the 2nd quarter. Last year the company earned $.18 in the second quarter, while projections then were only a nickel.

For a profitable growing company the stock price of Gigamedia has taken way too much abuse. IMO!

New Investing Blog

I have started another blog on investing called Investing Ideas.

The idea is to discuss a range of investment ideas and link to good ideas from other blogs/sites.

It has just started so check back occasionally to see how it goes. I plan to continue posting here as well. Thanks.

Cash to invest

As I posted last week here, my position in SPIL was called away, so I have some cash to invest.

I am trying not to invest during the first couple of days after expiration. A lot of call writers are trying to sell contracts, so I think that holds down premium pricing.

My sold call on Gigamedia GIGM expired out of the money. The share price on this stock has been quite ugly for the last two months. I still think the company has great future prospects so right now I plan to hold on. They should have an earning release next month, so I am looking for an anticipatory price run-up to sell a call into. Will keep you posted.

Option Expiration Week

I have 2 options expiring this week. First a call on Silicon Precision Industries SPIL. I bought the stock at $9.91 and sold the $10 call. It is now well in the money and my return will be 5.10% for 58 days, or 31.8% annualized.

SPIL is a profitable chip packaging company out of Taiwan that seems to be growing nicely. It makes a nice covered call trade when the share price is near a strike price so you can get some decent time premium.

My other expiration is on Gigamedia GIGM.  I bought this stock (again) in May for $14.54 and sold the July $15 option. This stock is very volatile, and for the last week has been falling and is now trading around $13, so the position is currently at a loss.

I really like the longer term prospects of this stock. Its business is primarily Internet gaming and profits have been growing at triple digit rates. Current PE is 21. I have sold 4 options on the stock since February for a total of $3.50 in premium and have made about $2.50 on share price appreciation. In May the stock was called away at $15 and I bought it back a week later at the $14.54 price. After expiration I will look for another bounce up in price before selling another call, probably the Sept $15.