MSFT june puts

Sold some MSFT june $22 put for .06 cents. Currently, MSFT is trading at $25+. Figured there is no chance that MSFT will go down to less than $22 in a week. Even if it does, I'll be owning a good company for 10 times earnings.

Safe Bond (PMK)

In this low interest environment, it is nice to find a relatively safe bond or preferred stock that pays > 8%. One of the ones that are really like that Ive mentioned before is PMK. PMK pays a monthly dividend (.o71cents) and in total pays .85cents per year. It is currently 9.75 so it pays a yield of > 8.5%. The par value is $10 and it matures in 2018.

The company (PMACA) is relatively safe profitable insurance company. Also, it is important that the bond matures in 2018 as opposed to something longer like 2040 since people are expecting an inflationary environment in the near future.

Target covered calls

I like the idea of selling covered calls on Target (TGT). It's currently trading at $35. The Jan' 10 calls are trading around $10. If you buy the stock and sell the calls, you are paying $25 for the stock. As long as the stock is above $25 on Jan' 10, you make money. And if it is $35 or above, you make 40% or $10. It seems like a good deal since Target is such a great company. I'm waiting for the stock drop a little, so i can get a better deal.

High Yielding preferred

I have a couple of preferred shares which are very high yielding, but a little riskier than the aegon preferred. But they do offer a compelling risk/reward ration.

The first one is bee-pa This is a preferred for Strategic Hotels & Resorts. They own a bunch of branded luxury hotels. Right now it is a horrible time for hotels as people don't have money to spend of vacations. However, they look like they will be cash flow positive next year. They have halted their dividend. Also, they do not have any debt to pay off until 2011. They also have 116 million in cash with some of the cash being restricted. However, they do have financial covenants to be able to borrow under their bank credit facility. Currently, they do meet these convenants.

It is hard to predict what will happen with the economy over the next year. However, my gut feeling is that they will survive. Currently their preferred is paying 50% yield at these depressed prices. This seems like a great deal to me. If economy comes back, bee-pa will go from $4 something to $20 something.

Another one I like is slm-pb. This is Sallie Mae (Studen Loan Lender). This preferred has a par value of $100 and it trading at $16. It is a floating rate preferred based on the libor rate. As current prices it yielding around 20%+. However, if the libor rate goes up, this could yield much, much more. However, I dont like Sallie Mae that much as a business. They might have to take big writedowns on their portfolios if students do not pay their loans this coming year. This could cause liquidity issues. However, they will be supported by Department of Education, which will provide them with funding. This company will never go out of business, but if things get horrible the government could just take them over and if the deal is like what happened with fannie mae, then the preferred could be worthless.

satyam

Satyam (say), an indian computer outsourcing company, stock price recently plunged because it's ceo wanted to buy two construction companies (completely unrelated to current business) controlled by the ceo's family business for 1.6 billion dollars. However, when investors complained, the ceo abandoned his plans, but the damage had been done. The managment has lot its credibility. However, if you look at the company is very, very attractively valued. It is trading at $8/share. Almost half of the $8, it has in cash. And it supposed to earn almost $1.50/share this year. With a PE of almost 5 and with that much cash on hand and the ability to genearte tons of free cash flow, this is a very cheap stock. I initiated a position at $8.15. Hopefully, they follow their plan do use the cash to buy back shares or somebody takes them over.

Aegon preferred

I really like the preferred stocks for the dutch insurer aegon. I currently own aeb. This is a floating rate preferred based on the 3 month libor rate. Even with the 3 month libor rate being so low, it is yielding around 15%. If and when libor rate goes up or when the stock market returns, this should definetly double in value. The dividend is safe as the insurer is getting billions of dollar from the dutch government to shore up its balance sheet. While you wait, you get a nice dividend.

REITs

The stock market has been brutual to me this year. However, I think it is signficantly undervalued. I have been buying a lot of reits lately. I bought HPT and HRP in the last week. HPT is right now yielding over 30% and after todays results, it seems the divident is safe. HPT owns hotels and leases them out to big companies such as HOST, TA etc... For the lease, they get paid a minimum yearly rental and a percentage of revenue. As a result, in bad times and in good times, their revenus is somewhat more constant. Also the companies that lease from them put down a deposit just in case they cannot meet their yearly rental. HRP leases office space. Usually their contracts span on average 6 years and also its biggest tenant is the US Government. So, they should be somewhat shielded from the current economic crisis. Both of these companies trade at a significant discount to their NAV. And they should be able to maintain their yield.