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June 2011



Short rebates and St. Joe

June 25, 2011 – Comments (1) | RELATED TICKERS: JOE

In options investing, there's a concept called put-call parity: a call option and a put option that are equally in the money (roughly the same strike price) and for equal durations will have the same price under most conditions. Selling a covered call on a stock, where you own the shares and sell calls to generate income, provides equal exposure to selling puts on a stock, where you sell just the puts to generate income. In both cases, if the stock declines, you own the stock but you did get the income. If the stock appreciates, you don't own the stock, but you own the income.   [more]



Energy Transfer buys Southern Union

June 16, 2011 – Comments (1) | RELATED TICKERS: ETE , SUG.DL2

Energy Transfer Equity (ETE) announced that it's buying Southern Union (SUG), a fellow pipeline company with a lot of West Texas assets. Southern Union is a C-corporation, and as such, it's at a disadvantage against MLPs - it has a higher cost of capital, whereas MLPs don't get taxed at the corporate level. SUG shareholders will receive Energy Transfer Partner (ETP) units, so SUG is getting folded into ETP.  [more]



And I'm really not interested in Groupon

June 06, 2011 – Comments (0)

Despite LinkedIn's very successful IPO, I don't believe that there is a general bubble in technology stocks. Some are undervalued (I think Cisco and Apple are among them). Many are about fairly valued, so I'd hold them if I owned them but wouldn't buy them. And, as in any industry, some are overvalued. Earlier, I stated that I thought LinkedIn had a viable and scalable business model, and that it had a defensible competitive advantage in its niche. However, LinkedIn is way overvalued, in my opinion.   [more]

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