option
An option offers its holder the right to buy or sell a particular security at a specific price within a specific time frame. Two kind of options are put options and call options.
Covered call writing is where you sell a call option against a stock you currently own. You receive cash for selling the call, but you’re obligated to sell the stock at a fixed price (the strike price) if the holder of the call exercises the option. Brokers sometimes recommend covered call writing as a way for investors to earn higher returns from their stock holdings. In our view, however, covered call writing (or any involvement with stock option investing) tends to act like an unintended profit filter. It can occasionally make you money, and it may cut your risk. But the net long-term effect is to filter out a big part of the profit you hoped to wring out of your investments....
Olivut Resources, $1.58, symbol OLV on Toronto (Shares outstanding: 31.7 million; Market cap: $49.6 million; www.olivut.com), is a diamond exploration company with a 100% interest in the HOAM diamond exploration project in the Northwest Territories. The company also has option agreements with Orosur Mining under which Olivut may earn up to an 80% interest in diamond prospecting and exploration licences for properties in northern Uruguay. It has further option agreements with Latin American Minerals Inc. to explore the Itapoty diamond project in central Paraguay. Olivut has discovered 26 kimberlites so far, but it has yet to conduct enough drilling to test for diamonds....
Our view is that virtually all Canadian investors should have 20% to 30% of their portfolios in U.S. stocks, like the ones we recommend in Wall Street Stock Forecaster. We feel now is a good time to hold high-quality U.S. stocks, and we see U.S. dollar exposure as a plus—a valuable form of diversification. Another option is to add some foreign exchange traded funds (ETFs), such as those we recommend in Canadian Wealth Advisor, to your portfolio in reasonable quantities, perhaps 10% of your holdings if you are a conservative investor (including 5% or so in higher-risk funds, such as emerging market ETFs)....
Teekay LNG Partners L.P, $35.16, symbol TGP on New York (Shares outstanding: 59.4 million; Market cap: $2.1 billion, www.teekaylng.com), transports oil and natural gas using its fleet of 21 liquefied natural gas (LNG) tankers—including one with an LNG regasification unit—11 conventional tankers and five liquefied petroleum gas (LPG) tankers. Teekay’s ships operate under long-term, fixed-rate charter contracts with major energy and utility companies. One of Teekay’s 21 LNG carriers is now under construction, and will be delivered later in 2012. In addition, the company has agreed to buy interests in eight Maersk LNG tankers through a joint venture with Marubeni Corporation. The deal should close early this year....
Stock options come in two varieties. Calls give you a right, but not the obligation, to buy a stock at a fixed price, for a fixed period.
THE BOEING CO. $63 (New York symbol BA; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 743.2 million; Market cap: $46.8 billion; Price-to-sales ratio: 0.7; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www.boeing.com) has received an order from Indonesia’s Lion Air for 201 of its 737 MAX passenger jet planes and 29 of its extended-range 737 aircraft. In all, this order is worth a record $21.7 billion. If Lion Air exercises its option to buy an additional 150 planes, the order’s value would rise to $35 billion. That’s equal to roughly half of Boeing’s annual sales of $68 billion. The company will deliver these planes between 2017 and 2025. Boeing is a buy.
Canada’s big five banks avoided the problems with subprime mortgages and European sovereign debt that have crippled many of the world’s largest financial firms. The big banks are now using their strong balance sheets to make acquisitions, often at bargain prices, and to upgrade their holdings. ROYAL BANK OF CANADA $45 (Toronto symbol RY; Conservative Growth Portfolio, Finance sector; Shares outstanding: 1.4 billion; Market cap: $63.0 billion; Price-to-sales ratio: 1.8; Dividend yield: 4.8%; TSINetwork Rating: Above Average; www.rbc.com) is Canada’s largest bank, with $730.6 billion of assets....
PROCTER & GAMBLE CO., $63.03, New York symbol PG, is one of the world’s largest makers of household and personal-care products. Some of its top brands include Tide detergent, Crest toothpaste, Head & Shoulders shampoo and Pampers diapers. In April 2011, the company agreed to merge its Pringles potato-chip business with Diamond Foods Inc. (Nasdaq symbol DMND), which makes a variety of snack foods, including potato chips, nuts and popcorn. Pringles accounts for less than 4% of Procter’s revenue and earnings. Under the terms of the deal, Procter will give its investors the option to exchange some or all of their shares for a holding in Diamond. That would give Procter shareholders 57% of the combined company. Diamond investors would own the remaining 43%....
Dividend reinvestment plans, or DRIPs, are plans some companies offer to allow shareholders to receive additional shares in lieu of cash dividends. DRIPs bypass brokers, so shareholders save on commissions. DRIPs also eliminate the nuisance effect of receiving small cash dividend payments. Second, some DRIPs let you reinvest your dividends in additional shares at a 5% discount to current prices. Third, many DRIPs also allow optional commission-free share purchases on a monthly or quarterly basis. Generally, investors must first own and register at least one share before they can participate in a DRIP. Registration will generally cost $40-$50 per company. The investor must then notify the company that he or she wishes to participate in the company’s DRIP....
EUROPEAN GOLDFIELDS $9.97 (Toronto symbol EGU; TSINetwork Rating: Speculative) (44 (20) 7408 9534; www.egoldfields.com; Shares outstanding: 183.8 million; Market cap: $1.8 billion; No dividends paid) has attracted a number of investments from Qatar Holdings LLC, a division of Qatar’s sovereign wealth fund, to develop its mines. Qatar Holdings has given European Goldfields a seven-year, $600 million U.S. loan. In addition, Qatar Holdings is buying a 9.9% stake in European Goldfields from Greek building firm Aktor Construction. European Goldfields will also issue warrants to Qatar Holdings that give it the option to increase its stake to about 29%. If it exercises these warrants, European Goldfields would get an additional $366.8 million....