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Rhinelander

Monday, February 13, 2012, Rhinelander, Wisconsin

Geeze, February is already the shortest month of the year, but this February is already almost over - at least from an expiration standpoint. We aren't quite two-weeks into the month and have already put thousands of miles into the mileage accounts of Frontier (RJET*), Southwest (LUV*), and newcomer Air TranAirlines - who is also a relatively newcomer under the LUV umbrella. We also have a Frontier Mastercard that we use for travel and other related expenses,and the points really add up. Our Gold Elite member Marriott status will also be added to with next week's stay at the New York Times Square Marriott Marquis Hotel, as we attend the Trader's Expo, and the flights from Wisconsin to New York and then back to Arizona will add even more to the flight miles - all paid for with either a Marriott Visa (V) or the Frontier Mastercard (MA).

Whether you use (abuse) a Visa or a MasterCard, and no matter where the card is issued, the two companies get a tiny little piece of each transaction thatyou make. We have not owned shares in either company in years, but now that the holidays have come and gone and the stocks have seemed to flatten- out and settle down to somewhat more reasonable levels, it might be time to take a credit card stand. If interest rates ever uptick these companies will probably benefit, each pays a small dividend, and there is plenty of options trade. The volatility is okay, so there is enough premium in the actively traded options to make quite a few different plays against the stock. Some equities were recently cleared off our sheets, some end-of-the-year stuff and more might be called this month, and we are firm believers in owning underlyings that we do business with, and man-oh-man do we do business with Visa and MasterCard!

Our pretty blonde-better-half and the heir-to-the-mortgage have recently opened a spiffy men's clothing store near the Courthouse Square in Prescott, so we are now even "taking" their cards and paying them the required "juice" for that "right." American Express (AXP) cards are not taken at the new store (B.O.S.S. District), although we do use our own AXP cards for some small mostly personal stuff, and it does pay a better dividend than V or MA. We do, however, really pile on the monthly credit expenses on Visa and MasterCards, so those would be the most likely ones to fit in our trading accounts. Maybe some short puts or a small long stock / short strangle position - or perhaps after the recent large run-up (both have done almost nothing but go higher for the last 6-weeks) it would be more prudent to wait for an overall market sell off. Yes, we are still long lots of underlyings and not really looking for any more stock, so best to wait for the much anticipated sell-off.

"Sold!  Sold!  Sold! Sell everything 'til your hands bleed! If you want to buy anything - I'll sell it to you." OEX Market Maker circa 1987

FHW
(* = FHW position)
fhwoption@hotmail.com

What's Frank Thinking? | 2/13/2012 5:39:47 PM | 0 Comments