By Andrew Snyder, TodaysFinancialNews.com
Baltimore — (TFN): Sometimes a little stress pays big rewards. The last four days have been about as haywire as I ever want to endure. On Friday, my pregnant wife endured a surgery where the ever-dreaded “C” word was discussed.
On Saturday we had the worst December snowfall on record. And on Sunday, when I tried to bring the pretty lady home our driveway was plowed shut with over two feet of snow blocking our path.
So, I did what any husband would do, parked the car in the neighbor’s driveway, cranked up the heat for the wife and got to shoveling.
In the end, it all worked out. We can rule out cancer. The baby is 100% healthy. And after four hours of shoveling, my driveway is ready for the next snowstorm.
As if that is not good enough, in my other life as a financial guru, life is good as well.
Just before I left the office on Thursday, I wrote TFN Strategic Trader members and told them to buy Louisiana Pacific’s February 7.50 calls (LPXBU).
Thanks to the news from Weyerhaeuser (NYSE:WY) that the company has “gone REIT,” I saw a trading opportunity.
Boy did it work out. Ever since the recommendation, shares of Louisiana Pacific have been on the rise. Since Thursday, shares are up by over 10%.
For you folks that follow the options market and the beautiful leverage that comes with it, you know a gain like that translates to something really big in the options contracts.
Indeed it does. Just a couple of hours ago, we bagged gains of 60%. That’s not 60% in a year. Or 60% in a month. It’s not even 60% gains in a week.
We gave investors a shot at turning $10,000 into $16,000 in just three days. Nice!
*** I wish I could say Sirius XM Radio (NASDAQ:SIRI) investors had the same kind of moneymaking potential. But they don’t.
I haven’t liked the situation at the company since, well… ever. But now that 2009 is just about over and the company still doesn’t have the kind of growth it needs, the outlook is far from good.
Here’s a part of what I told TodaysFinancialNews.com readers earlier today:
“As we have seen on the political front, hope and change will only get you so far. Sure, those two emotion-inducing words got Obama elected, but now that he hasn’t delivered too much change and the electorate is losing hope, the nation’s leader is facing his lowest approval ratings yet.
“It is a similar situation for Sirius XM Radio. Over the last year, investors have been touting the company’s future, especially since John Malone swept in and pulled the company from the grasp of bankruptcy.
“But now, with 2009 ready to go into the history books, investors are starting to wonder if the year was worth all the hype. After all, this was supposed to be the year of all years for Sirius.
“Looking at the company’s subscriber roster raises plenty of concern. Bullish shareholders will eagerly tell you how popular their company’s offerings have become and the rush of new listeners tuning in. But the figures beg to differ.
“This time last year, Sirius has 19 million subscribers. Right now, that figure is just 18.5 million. In the year the company needed growth the most, its revenue base contracted.
“Part of the reason for the decline was a horrific year for auto sales. With fewer consumers buying cars, fewer folks are buying radio units with Sirius receivers built in. This will have a lingering effect on revenues in future months.
“To be bullish on Sirius you must be bullish on the automotive sector, and I don’t know too many folks shouting about the opportunities in Detroit.
“And then, of course, there is the rising risk in Mr. Sirius himself, Howard Stern. Without this longhaired trash talker, Sirius would see its subscriber figures plunge.
“Now that Stern’s five-year, $500 million contract is ready to expire, the well-leveraged negotiator is up to his same old tricks, threatening to leave Sirius if he doesn’t get what he “deserves.”
“It’s a smart tactic, especially with the backing of a few million ever-loyal listeners, but it spells trouble for Sirius as the company tries to cut its costs even further. Remember, the company has yet to manage a profit. Another expensive contract could delay the event even further.”
Keep reading here to learn what I said share price will do next.
*** It’s another day and few more dollars off the price of gold. As I write, the value of an ounce of the shiny metal is just $1081, thirty dollars above my target buying price. It is all thanks to the strengthening greenback.
If things continue at this pace, it won’t be long until the dollar drops below $1.40 versus the euro. That would mark a more than 7% change in about a month. That’s a monstrous move in the currency markets.
It will have huge ramifications in the next round of earnings reports. Get ready for surprises. You will be hearing plenty more on the subject in the next few weeks.
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