January 29th, 2012

Toward the end of December I recommended NUAN stock. At that time it was selling at about $24 a share. Since then it has gone up to about $28.

If I were not an option writer I would have bought 1000 shares and would now be up $4,000. Since I am an option writer, I sold the April 21 puts and
took in $1,100, and I am up about $1,000.

The stock still looks strong to me, and I might take my $1,000 profit now and write another put closer to the new strike price. Or I might just be lazy
and keep my $1,000 profit unless something terrible happens to the stock during the next 6 weeks.

One of the fun parts of option writing is you get so many more choices, it’s not just buy and hold!


Market Update For Week Ending 1/27/2012

January 28th, 2012

Index Close Net Change % Change YTD YTD %
DJIA 12,660.46         -60.02         -0.47         +442.90         3.63        
NASDAQ 2,816.55         +29.85         1.07         +211.40         8.11        
S&P500 1,316.32         +0.94         0.07         +58.72         4.67        
Russell 2000 798.85         +14.23         1.81         +57.93         7.82        
International 1,495.59         +23.54         1.60         +83.05         5.88        
10-year bond 1.90%        -0.13%          +0.03%          
30-year T-bond 3.06%        -0.04%          +0.17%          
International index is MSCI EAFE index. Bond data reflect net change in yield, not price. Indices are unmanaged and you cannot directly invest in an index.
More market data

Market Wrap
After delivering the best early January performance in recent memory, U.S. stocks turned mixed as the end of the month approached. The blue-chip Dow industrials gave up 0.47% and the S&P 500 closed only minimally higher. However, the technology-rich Nasdaq surged 1.07% and the economically sensitive Russell 2000 ended the week with a 1.81% gain. Foreign shares held up well, up 1.60%. Treasury yields declined significantly after the Federal Reserve’s latest policy meeting indicated that interest rates would likely remain low for some time to come. For more on recent trading activity, please read:

U.S. Economy Grows At Its Best Rate Since Mid-2009
Far from dipping into a recession as some pundits feared, American gross domestic product (GDP) — the broadest gauge of the economy’s health — actually improved significantly in the fourth quarter. GDP growth accelerated to an annualized 2.8% between October and December. While investors hoping for even better growth were disappointed, economists noted that there was still room for consumer spending in particular to improve in 2012 and beyond. For more on the latest reading on the U.S. economy, please read:

Federal Reserve Vows To Keep Interest Rates Low Through Late 2014
The Federal Reserve’s monetary policy committee surprised few investors this week by leaving short-term U.S. rates unchanged. However, the Fed unexpectedly announced that it is extending its zero-rate policy a little further into the future in order to shield the economy from long-term risk. As it stands, Ben Bernanke and company now believe they can keep interest rates at zero for roughly the next three years. Whether they can do this without inviting inflation remains to be seen. For more, please read:

Market Update For Week Ending 1/20/2012

January 22nd, 2012
Index Close Net Change % Change YTD YTD %
DJIA 12,720.48         +298.42         2.40         +502.92         4.12        
NASDAQ 2,786.70         +76.03         2.80         +181.55         6.97        
S&P500 1,315.38         +26.29         2.04         +57.78         4.59        
Russell 2000 784.62         +20.42         2.67         +43.70         5.90        
International 1,472.05         +56.83         4.02         +59.51         4.21        
10-year bond 2.03%        +0.18%          +0.16%          
30-year T-bond 3.10%        +0.20%          +0.21%