Posts Tagged ‘trade’
Corning Inc. (GLW): An Old Dog with Some New Tricks
Corning Incorporated (NYSE:GLW) has been manufacturing glass and ceramic products for more than 150 years. This has meant everything from the white casserole dish your momma used to bake with to lab beakers and flasks. But Corning has a brand new bag; well … it’s actually a 48-year old patent that has been sitting dormant until now.
If you look around your house and in your pocket at your mobile phone, you may notice that glass is a prominent material used. Corning’s “Gorilla Glass” is up to three times as strong as chemically strengthened versions of ordinary soda-lime glass that is double the thickness (in other words, it’s wicked strong). This makes Gorilla Glass perfect for cell phones, TVs, touch-screen monitors, etc., all of which are prone to scratching, breaking, and weight sensitivities. Because of the strength of the glass, designers of many electronics products would have more flexibility and thus an increase in possible form factors to attract consumers.
The best part about this is that the research and development is already done and the costs absorbed, which is a positive for Corning (although I am not sure about patent protection). If you have cracked or scratched your cell phone (iPhones are especially prone to this), you understand the need for a much more scratch- and shatter-resistant glass. Obviously, these benefits come with a cost – literally. Gorilla Glass is pricey and might add $30-$60 to the average flat-screen TV price, according to DisplaySearch Analyst Paul Gagnon.
Reversion to the Mean
by Jared Levy on July 8, 2010
One of my favorite things to do is observe and sometimes laugh as market pundits (and sometimes that includes me) attempt to explain the reasons why the market does what it does. I woke up Thursday morning to S&P futures again moving higher by seven points and 10-year note yields above 3%. Lo and behold, the same folks who were calling for near-Armageddon last week now seem to think all is good in the world. The headlines read, “Unemployment Claims Drop More Than Expected … Market Looking Strong.” But is it … really?
The S&P was up 31 points Wednesday and is up roughly 60 points from its recent low of 1010 just a couple of days ago. When the the S&P was trading at those lows, the index was below the two standard deviation daily Bollinger band, an oscillator that many analysts and traders use to pinpoint overbought or oversold conditions, (in this situation, the reading was obviously indicative of an oversold condition).
Supposedly, the big catalyst yesterday morning was that first-time unemployment claims for benefits dropped 21,000 in the past week to 454,000, when analysts were expecting a more narrow pullback to roughly 458,000. First off, the weekly numbers tend to be extremely volatile and generally don’t tend to get a ton of attention because of their unpredictable nature and their high tendency for revisions. Aside from all that, this number is not great and is just a tad below what analysts were expecting; it certainly doesn’t strike me as earth shattering.
Five Notable Options Myths
by Jared Levy on July 8, 2010
1. All Options are Extremely Risky
Even though options are becoming more and more mainstream, there is still a large faction of the investing crowd that believes all options are extremely risky. In fact, there are many options strategies that are less risky than the underlying stocks they derive their price from. Out-of-the-money (OTM) options may be the culprit of this misconception as they tend to be cheap and lure many new, inexperienced investors with their cost. We all know that many things in life are cheap for a reason, and while there may be a time and place to invest in OTM options, you must always use caution.
Also, be sure you fully understand what your risk is at the onset of a trade. Buying options will give you a limited risk, typically at a cost that is cheaper than buying 100 shares of the stock outright. The other mistake options traders can make is to invest as much in options contracts as they would in 100 shares of stock. While this can increase leverage, it may also increase risk. There are actually options strategies that can greatly reduce risk and volatility and while some may limit profit, they can still provide returns that many investors would consider exceptional.
2. An Option’s Behavior is Mysterious and Magical
This is another complete misconception. Again, this myth stems from inexperienced traders who don’t understand how options are priced or realize how and why options prices change. Understanding all of “The Greeks” and how they measure an option’s sensitivity to specific variables is critical to grasping the behavior of options.
Remember that options:
- Are legitimate financial products
- Are not mysterious or magical
- Perform “as advertised”
- Require work to be properly understood
3. Market Makers are Out to Get Me (A/K/A: “They” Know What I’m Doing!)