Monday, September 3, 2012

On the Radar - RKT, CNQR, MDVN and WHR

From the Leading Stocks post earlier today, here's a listing of the top 20:

Some notes on the columns.

  • Margin is $ requirement for each naked put contract written.
  • Premium is the $ received for each naked put contract written.
  • Yield = Premium / Margin requirement.
  • Probability OTM is the probability the option expires out-of-the-money.
  • Expectancy Yield is simply Yield * Probability OTM.
As you can see, multiple rows show #DIV/0! errors.  These are highly-ranked stocks, but the premiums aren't attractive to me.  Generally, I want to collect at least $30/contract sold with at least a 85% probability of expiring OTM for the next monthly option expiry, currently September.  Those that don't make the cut, no need to run the calcs; hence, the lines with errors.

In focus are the 4 stocks offering an Expectancy Yield > 4.0%.  As an example, let's take a closer look at CNQR.

Concur Technologies, Inc. (Concur) is a global provider of on-demand Employee Spend Management solutions. The Company’s software solutions enable organizations to control costs by automating the processes used to manage employee spending. Its solutions unite online travel procurement with automated expense reporting and optimize the process of collecting, submitting, tracking and paying supplier invoices and check requests. Its provides its customers with visibility into their employee spending, which helps to analyze trends, influence budget decisions, and monitor and enforce compliance with corporate policies and external regulations, including the Sarbanes-Oxley Act. It sells its solutions and services on a subscription basis and delivers them on-demand.

BRIEF: For the nine months ended 30 June 2012, Concur Technologies, Inc. revenues increased 27% to $321.9M. Net income decreased 64% to $1.2M. Revenues reflect United States segment increase of 24% to $272.8M, Europe segment increase of 50% to $37.1M. Net income was offset by Sales and marketing increase of 24% to $127.4M (expense), Amortization of intangible assets increase from $6.9M to $13.8M (expense).

Daily chart:

Hourly chart:

On the hourly chart, trading action is near the lower regression trendline.  A break below and $71 is next support from the daily center regression line.  Next support comes in circa $67 and then $63 below that.  On the upside, need to meaningfully break above $73, bringing $75 into play.  YTD, the worst 3-week drawdown (there are 3 weeks until September expiration) on a close-to-close basis has been (9.16%), which came back in the March-April timeframe.  From Friday's close price of $72.4, $65.00 at September expiration would represent a loss of 10.22%.

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