WWJD

So the Republicans in the House passed a $50 billion tax cut for the best off . . . no relief from the Alternative Minimum Tax that will soon bite millions more middle-class taxpayers . . . and a $40 billion cut in things like health care for the poor.

Got it? Cut taxes on the rich, let them rise for the middle class, reduce aid to the poor. Very Republican. Very Christmassy.

TIVO

Jim Roberts: You SAY, ‘With most TiVo setups, you can only watch a previously recorded show while recording another.’ Many TVs have multiple inputs on the back. It is easy to split the cable wire signal so that Tivo can record one channel while you can watch another.’

☞ To mask my ineptitude and have the luxury of watching both shows on my own time, and fast-forwarding through the commercials, I prefer the even easier, albeit less economical solution: a separate TiVo on each of two separate sets. (With help from a genius down the hall, I even managed to get them talking together over my home network, so I can transfer programs from one to another. All this as a stopgap until, in a few years, you’ll just be able to look at any wall in your house – or your iPod if you’re in a pup-tent – and say: ‘Wall – show me the latest episode of Malcolm in the Middle.’ Which, by then, will be the episode in which Malcolm graduates from Law School.)

BOREF

Slowly but steadily – I like to think – Borealis bee-bops along. You will recall that its Chorus Motors subsidiary has an electric motor the size of a watermelon that drove a fully loaded Boeing 767 around in 120 degree heat as if it were a golf cart. Yesterday, the company announced a deal with Magnetek to develop a motor to power underground mining equipment.

“Magnetek is an excellent partner for us”; said Isaiah Cox, Chorus’s President. “The underground mining market has very rigorous requirements in which reliability and performance are at a premium, and Magnetek will ensure that the products we make will meet and exceed the industry’s expectations.”

‘The Chorus technology allows Magnetek to provide an AC motor and drive package with torque performance equal or greater than the existing Series DC controls’ according to Ed Butte, Magnetek VP Product Management. ‘It also provides a level of redundancy that will allow greater up-time and throughput for our mining customers.’

The agreement provides for the development of Chorus® motors for haulage equipment, shuttle cars, and regenerative traction drives, with further products envisaged over time. Marketing, integration, sales and ongoing service and repair contracts will be handled by Magnetek.

☞ It’s a fairly safe bet that if I can’t handle a cable-splitting hook-up of my TiVo, I don’t have any idea what a regenerative traction drive is.  But I take this announcement as another reason that our shares in the parent company might more properly be selling for $100 than the current $14 or so.  At that level (as argued here August 3), you have a lottery ticket that could still rise tenfold or more (which is why someone might not be stupid to pay that much) but that could certainly still go to zero (which is why I might then part with a few shares).

NTMD

Jim Taylor:  “You write: ‘If you bought the December 30 NTMD puts five months ago when we started this discussion, you were up around 85% (before taxes) when they expired Friday afternoon.’  Does this mean that you collect the money at expiration?  I always thought that options expired at no value if not exercised.”

☞ Three things can happen on the third Friday of the month in which options expire (it’s like Thanksgiving but on Fridays instead of Thursdays and the third instead of the fourth and every month not just November):

  • If your options have no value, because they’re “out of the money” (the right to sell your house for $300,000 has not value if people are knocking down your door to pay $500,000), then they just expire worthless and you take the loss on your taxes as if you sold them.Sorry it didn’t work out.
  • If they do have value, then you can just sell them at any time before the market closes that day.(Of course, in many cases you might not have waited – you might have sold them days or weeks or even months earlier, to take your profit and not risk seeing it disappear.)
  • This is simplest and cleanest, even though you may get clipped for a few pennies by the market makers, who never seem to go to bed hungry.  (You ordinarily won’t get clipped too badly, because the options market makers know you could always just exercise your option – buying the stock if it’s a call, selling it if it’s a put, and then more or less instantly selling or buying those shares in the open market to close things out.)
  • If you forget to sell an option that has significant value, your broker’s computer will exercise it for you, which may make for some confusion or a small heart attack when you first see that you bought or sold 100 or 1000 or 10,000 shares of some stock you never actually planned to own, but should nonetheless put you in a position to unwind the position with more or less the same profit as if you had remembered to sell the options sometime before Friday afternoon.

Of course, this is dangerous stuff to know.  Ordinarily, puts and calls are NOT something people should speculate in.  Gambling is gambling, and rarely a good idea.  With NTMD, I’ve thought the odds were unusually good.

PS – One of the firms that follow NTMD, Friedman, Billings, Ramsey & Co., apparently reduced their sales and earnings estimates yesterday and lowered their price target for the stock from $29 to $13.

 

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