All about investment

by Bill

On the Nasdaq and SEC website it can be found from October 26, 2004 to February 7, 2005 (that is, several U.S. law firms launched on Sina's "collective action period (class period)" Investigation), Sina insider trading transactions. I calculated Sina's board and management sold a total of 97.4433 million shares of Sina shares, representing 1.93 percent of Sina total share during this period .

During this period, the Sina CEO Wang Yan and CFO Cao sold total 30.9 million shares of stock. Because we don't know the the total number of shares they hold, we don't know whether they they dump all their share through these insider trading actions.

I lists Sina's insider trading data, found from sec.gov, as follows:

Sina CEO Wang Yan on the October 29, 2004 sold 1.35 U.S. dollars a share, the price of the implementation of the 10 million shares of Sina options; He also sold 1.88 per share on November 19, 2004 to 1.88 per. The implementation of the dollar price of 50,004 thousands Sina options, and then the price is 37 U.S. dollars sold. Total sold 15.4 million shares.

Sina CFO Cao Wei on the October 29, 2004 sold 1.88 U.S. dollars a share, the price of the implementation of the 10 million shares of Sina options; He also sold 1.35 U.S per share on November 19, 2004. Total sold 15.5 million shares.

Sina executive vice president Jiang Xianbin in the October 29, 2004 to 1.88 U.S. dollars a share, the price of the implementation of the 20,005 thousands Sina options. Total sold 2.5 million shares.

Sina COO Lin Xinhe on the October 29, 2004 to 1.35 U.S. dollars a share, the price of the implementation of the 12 million shares of Sina options; He also November 22, 2004 to share 1.88 U.S. dollars the price of the implementation of the 95,833 shares Sina options, and to 35.739 U.S. dollars was sold. Total sold 21.5833 million shares.

Sina Co-Chairman Jiang Fengnian on the November 3, 2004 at a price of 34.535 U.S. dollars sold 11.3 million shares of Sina stock; again on November 4 a share, the price of 34.549 U.S. dollars sold 2 million shares of Sina stock; November On the 8th to 34.655 U.S. dollars a share, the price of the stock sold 6.7 million shares of Sina. Total sold 20 million shares.

Sina director Cao Defeng on the November 17, 2004 sold 38.935 U.S. dollars a share, the price of shares sold 5 million shares of Sina; again on November 18 a share, the price of 37.541 U.S. dollars sold 6 million shares of Sina shares. Total sold 11 million shares.

Sina director Zhang Yichen on the November 17, 2004 sold 1.88 U.S. dollars a share, the price of the implementation of the 20,002 thousand six hundred Sina stock options, and to 38.270 U.S. dollars was sold He is also on 1 December 2004 1.88 U.S. dollars per share, the price of the implementation of the 20,007 thousands Sina options, and to 38.709 U.S. dollars was sold. Total sold 4.96 million shares.

Sina directors Pehong on the November 18, 2004 sold 17 U.S. dollars a share, the price of the implementation of the 20,007 thousand five hundred Sina stock options, and to 37.021 U.S. dollars was sold. Total sold 2.75 million shares.

For more real time insider trading data, updated simultaneously with sec website and organized for easy use, please refer to insidertradings.com

by Leefe Poche

Some investors buy large cap stocks, the ones that usually don't move too much in the short or intermediate term, and they sell far out of the money covered calls three or four times a year in order to increase the "dividend" that they are receiving. If that stock already pays an actual cash dividend of 3 or 4 percent, the investor can often collect another 6 or 8 percent per year by selling out-of-the-money covered calls without getting the stock called away.

If the stock does get called out, that investor would still make a positive return because the stock will probably have risen by 5 points or more in order to get called out. When that happens, the investor has collected the actual dividends that have accrued while he or she owned the stock, as well as the price increase between where the stock was when the trade was opened and the strike price of the covered calls sold.

For an example of selling far out-of-the-money covered calls on a blue chip stock, let's use Exxon Mobil (XOM). It's the largest stock in the world by market capitalization. It closed at 93.13 on October 10, 2007. Suppose the investor buys 100 shares of XOM at that price and then sells one of the January 100 calls (XOMAT), which could be done for 2.05 points at the close. The trade has slightly more than three months of time remaining, so it could be done approximately four times a year. If XOM finishes below 100 at January expiration, the investor gets to keep the entire 2.05 points of premium taken in. That's like getting an extra "dividend" of 2.20 percent during the next quarter. Repeat that three more times during a year and that investor has brought in nearly 9 percent of income from a blue-chip stock. The actual dividend yield on XOM is only 1.5 percent so this investor would be really enhancing the income flow.

If the stock runs up and closes above 100 at January expiration, it will get called out. The investor will lose the stock, but he or she will get to keep the 2.05-points of premium received for selling the call as well as the increase in the stock price from 93.13 to 100. That works out to a total profit of 8.92 points, or 9.6 percent, in less than three months. That's a great return in and of itself.

The worst case scenario would be for the stock to head lower right from the start and continue to dive. When something like that happens, the investor probably wants to get out and take a loss when it is still modest in size. Some stubborn investors rode Nasdaq stocks from triple digit prices down to almost nothing during the great bear market of 2000 to 2002. There's no reason to be that stubborn. If you have a trade that's not working, usually the best thing to do is to get out before it turns into a disaster. In the case of covered calls, some cheap out of the money puts could be bought to guard against the worst case scenario.


About the Author

Leefe Poche is the editor of http://www.covered-call-of-the-week.com/ a free newsletter that has commentary and one covered call selection every week.