The Original Profit-Taker
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- The ‘Game' in a nutshell
- #1 'LIVE' Choice for March 2010
(First posted before market opening on Mon., March 15, 2010.
Based on closing prices of Fri., March 12, 2010.)
- Sonic Automotive 5% of 2029
In a Nutshell
________________________________________________________________________
2010 Orders Filled Profit (Loss)
________________________________________________________________________
March 15
Buy 27 bonds at $1135 each
Sell short 1009 common shares at $11.76.
(Based on our game investment of $15,000 plus an additional conservative 50% margin of
$15,000)
______________________________________________________________________________
2011
February 7
Sell short 336 shares at $14.11 (profit locked in) $789.60
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Total annualized profit 5.83%
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THE PROFIT-TAKER GAME PLAN:
Sonic Automotive
Common
Stock Price ($)
18.82 Long-term Goal (Uptrend)
16.46 Sub Goal 2 (Uptrend)
*14.11 Sub Goal 1 (Uptrend)
11.76 Initial Purchase Price
7.84 Sub Goal 1 (Downtrend)
3.92 Sub Goal 2 (Downtrend)
0 Long-term Goal (Downtrend)
*Underlined blue is price of last 'filled' trade.
Gamers! To verify current price, click here.
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Please Note Well:
In the beginning on March 15, 2010.
We bought 27 bonds. CALCULATION: $30,000 ($15,000 of which is margin) divided by $1135
(price of a convertible bond) = 27 bonds (rounded off).
Total investment = $30645
We start our plan as a half-hedge. That is, we sell short half the shares represented by our
27 bonds which equals a total of 1009 shares sold short.
CALCULATION: 27 bonds x 74.724 shares per bond = 2018 shares.
So a half-hedge is ½ of 2018 or 1009 shares sold short.
Always sell short 336 shares on each move to an upside sub goal.
That is, 1009 shares sold short, divided by the 3 upside sub goals = 336.
Always cover ('buy in') 336 shares on each move to a downside goal. That is, 1009 shares
sold short divided by the 3 downside sub goals = 336.
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CONVERTIBLE BOND FACTS:
Sonic Automotive 5% of 2029
CONVERTIBLE PRICE : 113.50% or $1135.00
NUMBER OF SHARES: 74.724 shares per bond
CONVERSION VALUE : 87.88% or $878.80
PREMIUM : 29%
TERM CHANGE: 0
MATURITY: October 1, 2029
EXCHANGE: New York
CURRENT YIELD : 4.41 %
ISSUE SIZE: $ 172.50 MILLION
INTEREST PAYMENT DATES: April 1 and October 1
CALL PRICE: No call price
CUSIP : 83545GAQ5
INDUSTRY: Retail Automotive
_______________________________________________________________________
UNDERLYING COMMON STOCK FACTS:
Sonic Automotive
PRICE: $11.76
HI (52 WEEKS): $15.15
LO (52 WEEKS): $ .72
VOLATILITY (%) (52 WEEKS): 123 %
HI (LAST 3 MONTHS): $11.82
LO (LAST 3 MONTHS): $9.05
VOLATILITY (%) (LAST 3 MONTHS): 24%
HI (1 MONTH) 11.93
LO (1 MONTH) 9.47
VOLATILITY (%) (LAST 1 MONTH) 21%
EXCHANGE: New York
MARKET CAPITAL: 613.15 MILLION
DIVIDEND: NIL
SYMBOL: SAH
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NATURE OF BUSINESS
- The Company operateS 145 dealership franchises at 122 dealership locations,
representing 29 different brands of cars.
Company Official Website; www.sonicautomotive:
_______________________________________________________________________
Is the premium on the bond under 20%? 10% 2%
Of the situations being considered, how does 50% 45%
the volatility of this common stock compare
with the other candidates?
Is the market price of the convertible bond 10% 2%
under $1000 (par value)?
Does the yield (%) paid by the bond, less the 5% 5%
common stock yield, at least offset the interest
paid to your broker for margin privileges?
Does the company pay dividends on the stock? 10% 10%
( The investor must pay declared
dividends on short sales).
Is there a record of convertible premiums? 5% 5%
Does the company have assets in excess of the 5% 5%
face value of the bonds?
Is the company in an industry in which there is 5% 5%
a possibility of growth?
TOTAL: 100% 79%
Of the situations being considered, how does 50% 45%
the volatility of this common stock compare
with the other candidates?
Is the market price of the convertible bond 10% 2%
under $1000 (par value)?
Does the yield (%) paid by the bond, less the 5% 5%
common stock yield, at least offset the interest
paid to your broker for margin privileges?
Does the company pay dividends on the stock? 10% 10%
( The investor must pay declared
dividends on short sales).
Is there a record of convertible premiums? 5% 5%
Does the company have assets in excess of the 5% 5%
face value of the bonds?
Is the company in an industry in which there is 5% 5%
a possibility of growth?
TOTAL: 100% 79%
NOTIFICATION
The Profit-Taker Copyright 1978, 1980,1986, 2009
All rights reserved
Permission granted for personal and educational use only. .
utilizing this intellectual property/concept as their own will constitute an infringement of this
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Information contained in this Website and attachments is of a general nature only and is not
intended to constitute advice for any specific situation. The terms of referral bonuses may vary
and are only applicable suitably qualified professional should always be sought in relation to
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