My 1st Million At 33 – yes, you can do it too

I’ve not seen such a huge swing in a stock in a single day. IMB (which closed at $21.69 on Monday) opened at $23.10, and then went down to 20.90, came all the way back up to $26.10, and then went all the way down to close at $22 again.

This play is about IMB. If you buy IMB, and sell $15 covered call simultaneously before August 6th (dividend record date is August 9th), you should be able to pocket $0.50 dividend “risk-free”, assuming IMB stay above $15 before and on August 19th. I’ve watched the action of IMB yesterday all day. The bid price on IMBHC.X (August call at $15) is pretty much roughly $0.10 below the stock price (except when it traded closer to $26). That means that your profit would be
$0.50 – $0.10 = $0.40 on every $22 that you spent to acquire IMB. That’s about 1.8% for 18 days, and since money market can return 5%/12/30*18=0.25% in about 18 days, your profit is about 1.55% for 18 days. Don’t forget to include the commission of $0.75 for every contract (at Izone & IB), and $30 for assignment fee at Izone. That would be an annualized profit of 31.4%, ASSUMING that IMB does NOT fall below $15.

I did listen to the conference call of IMB yesterday for the first 40 minutes. It seemed to be pretty okay, unlike AHM who fell 90% yesterday.

By the way, this stock market really looks like it’s in big trouble. The lows has been breached at the downside. I think S&P 500 is going down to 1400 to 1410 area. QQQQ may be going down to $47.

Why isn’t short covering? I think there are two easy answers:
1. Shorts have been squeezed out already. Panic bulls now have no one to cover for them.
2. Many shorts have shorted at the price level even below the current level. Assuming that they have survived the raging bull on the way up, they won’t be easily covering their shares back after waiting for so long.

So look out below. Precious metals are performing better relatively speaking these days, while energy sector is probably second. Financials are obviously the worst.