Before we explain why investing in options is like playing chicken, we want to share our note to the Salve Lucrum Family from after the close of the market today.

Boys and Girls;

All the indexes were up today, possibly indication that Tuesday's drop was just some nervousness and big player profit taking. We have two nice days of gains. I will look at volume later tonight.

We had a couple of excuses for softness today such as a weaker than expected jobless claim number and a soft February retail report. Mr. Market took that in stride.

Oil was up and gold was up. Our VXX anchor got a little heavier today.

Here is a heads up on the Core Holdings.

XOM Did nothing. Did not even keep up with the market or the little spike in oil. I am looking to sell some calls tomorrow for those of you that have margin accounts and option level 3. They will be out of the March 17 or 26 calls.

AAPL People are warming up to the new iPad 4G (I ordered mine today) and can see a 700 dollar stock out there. Adobe is opening up their bag of Flash tricks for Apple programmers, Cook has used the word dividend several times in the last two weeks, Apple TV is getting noticed a a potentially huge income stream and China Unicom is getting closer and closer to securing a deal with AAPL for the iPhone. (A conservative estimate of 50 million iPhones in the first 12 months of service.)

MSFT Nothing exciting.

CELG it was up more than 2% today on news they have completed their, what should be, an accretive acquisition of Avila Therapeutics.

UNFI was in line with the market.

GWW has kind of stalled on us since the 10th of February. We like the 10-11% gains most of us have (Sorry Ben you're a late bloomer) but it would be nice to see this break out of this 204-210 range. We still like it and are LONG and have some March 17 $210 call positions sold against the LONG positions.

MGRC nothing to report.

As far as speculative stocks, LQMT came back from the stratosphere, but this should a fun stock.

That's it until I get home tonight and do more homework.

Playing Chicken?

OK it's not like racing a car head on into another car, but it is exciting. We told you a week or so ago that we were selling call options against some LONG positions. Specifically we sold calls against XOM, AAPL, and GWW. As we described, worst case scenario, the buy of the call option can call away your stock and you keep the premium for selling plus any gains in the long position, but you no longer own the stock.

So some times you see your call options that you sold get ridiculously cheap creating a huge profit and it really really hard not to stay patient and what for them to expire worthless so you keep the premium and the stock.

Well today I blinked on XOM and AAPL. We were enjoying a 74.8% gain on the XOM calls and an 83.3% gain on the AAPL calls. I was not patient and pulled the trigger on both, taking the profit. I even lowered the bid to get those returns.

Now I still have the stock, and I have the profit from the sale of the calls. BTW, the return in AAPL was achieved in 4 trading days and the XOM profit was achieved in 3 weeks. Tomorrow, we will look at the weekly calls on both and look for another opportunity to sell call options. Remember there are weekly options (becoming more and more popular) and monthly options.

Pick Of The Week

As we have mentioned, we are so many mail lists for stock and option ideas, that it really is over whelming. We literally will get 50-60 a day. It is hard to keep track of them and honestly many go by the wayside and we never get to check them out.

This morning we had a few minutes to check a few and we actually found on of interest. Enough to start a position.     

ACET Aceto Corporation engages in the sourcing, regulatory support, marketing, and distribution of pharmaceutical intermediates and active ingredients, finished dosage form generics, nutraceutical products, agricultural protection products, and specialty chemicals worldwide. The company operates in three segments: Health Sciences, Specialty Chemicals, and Agricultural Protection Products. The Health Sciences segment supplies raw materials used in the production of nutritional and packaged dietary supplements, including vitamins, amino acids, iron compounds, and bio chemicals used in pharmaceutical and nutritional preparations. The Specialty Chemicals segment provides various chemicals used in plastics, surface coatings, textiles, fuels, and lubricants; organic intermediates used in the production of agrochemicals; and dye and pigment intermediates used in the color-producing industries, such as textiles, inks, paper, and coatings. This segment also offers diazos and couplers to the paper, film, and electronics industries. The Agricultural Protection Products segment sells herbicides, fungicides, insecticides, and other agricultural chemicals that control weed growth, as well as control the spread of insects and other microorganisms that can damage plant growth. This segment also provides sprout inhibitor for potatoes and an herbicide for sugar cane. It serves pharmaceutical, nutraceutical, agricultural, coatings, and industrial chemical consuming industries. Aceto Corporation was founded in 1947 and is headquartered in Port Washington, New York.

Fundamentally, the stock is sweet. I checked them out on FinViz and they are solid. If you want the details, call me and I will tell you.

IDB and MarketSmith love them and more importantly, they had a nice buying point at about $7.20. we don't normally like to get in a stock so high above a recent buy point, but we like everything about the stock. We are in LONG at $8.70 a share and have our stop set at $8.00. It is too early to call this a core holding and we do want to read a few quarterly earings on this before doing so. At the very least, you might want to put this on a watch list. We see 10.00 in their near future.

Salve Lucrum