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NUCOR
CORP
 
About The Company

Market Cap 14.5B
Revenue (FYR) $15.8B
EPS (TTM) $.42
Shares Out. 316M
Book Value $22.25
Div/Share $1.45
Payout Ratio 346.5x
P/E 100x
P/Cash Flow (TTM) 18.4x
Operating Margin 1.69%
Debt To Capital 37.29%
Gross Profit Margin 5.32%

Nucor specializes in the sale of steel and related products in North America. Unlike other steel producers, Nucor has not cut its dividend but increased it for 37 years in a row.  

 

 

 
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  NUCOR CORPORATION  (NUE) - 2011
ONGOING EVALUATION & TRADE
My original goal back in 2010 for NUCOR was to own shares around the $30 to $35 range. Back in the Spring and Summer of 2008 this stock was trading between $70 and $80. Since then it has fallen dramatically and still not recovered. I had thought by now Nucor would have recovered to at least the $60 level, along with the supposed economic recovery, but this has not happened. The volatility in Nucor makes for an interesting naked put trade as premiums have remained decent throughout the past two years. Now trading at 110x earnings, with earnings per share of just .42, how Nucor can continue to pay out their dividend and increase it is difficult to surmise. This stock bears a lot of watching. The company is doing everything possible to reduce costs. The goal therefore has changed as while originally interested in owning shares, it is apparent to me that this has become a trade where if assigned shares, I would immediately sell covered calls to unload the shares. I would have no interest in any long term holding of Nucor. The objective then will be income gain through selling naked puts while doing my best to avoid being assigned. Should further declines appear in Nucor, I would move to lower my risk.
NUCOR TRADES BY YEARS
VIEW NUCOR 2011 TRADES
VIEW NUCOR 2010 TRADES
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Should you find my strategy and ongoing evaluation of this trade of value I hope you will consider a tip for the time I spend detailing out this trade. I have set up a Paypal account for those who would like to donate. Thank you in advance. Remember, nothing on my site is financial advice. They are just my ideas and opinions. Investing is risky and losses can be large. Trade at your own risk. Read the terms of use

 

 

YEAR 1: 2009 - Trade Commenced Dec 11 2009
Goal for 2009: 1% (1 months)
Strategy: Sell Naked Puts Until Assigned
 
Capital In Use At End Of 2009 39,000.00
Income Earned in 2009 (5 months) 2128.75
Return On Capital in 2009 (5 months) 5.4%
   
YEAR 2: 2010
Goal for 2010: 12%
Strategy: Sell Naked Puts and Avoid Assignment
 
Capital In Use At End Of 2010 34,500.00
Income Earned in 2010 4652.25
Return On Capital For 2010 13.25%
   
YEAR 3: 2011
Goal for 2011: 12%
Strategy: Sell Naked Puts Until Assigned
 
Capital Currently In Use 50532.75
Income Earned in 2011 4854.00
TOTAL INCOME EARNED TO DATE 11635.00
Total Of My Own Capital Required 38897.75
Number Of Shares if assigned 1500
Share Price Valuation
(Total Capital Required/Number of shares)
25.93

YEAR - 3:  2011
TRADE COMMENCED Dec 11 2009
GOAL FOR 2011: 12%

ONGOING STRATEGY - SELLING NAKED PUTS UNTIL ASSIGNED
* ACTIVE TRADES ARE HIGHLIGHTED IN YELLOW

 

Jan 21 11 44.55 Expiry: 5 naked puts Jan 36 expired
5 naked puts Jan 33 expired
               

Jan 24 2011 Nucor has had a nice recovery from the lows of the fall. Analysts expect the earnings to improve as the recovery seems to be recovering. I will stay out of the money as this stock could just as easily fall back into the mid 30's. It is after all trading at 110x earnings.

 

 

Jan 24 11 44.60 STO 5 Naked Puts Feb $41.00 @ .67 1.6%     13.25     321.75 7102.75
Jan 24 11 44.60 STO 5 Naked Puts Feb 40 @ .46 1.00     13.25     216.75 7319.50

Feb 17 2011 With today's options expiry Nucor has moved higher. I think Nucor is a bit ahead of itself. The recent run up in prices are somewhat suspect as earnings are not supportive of the stock at this price. I will wait a few days before selling my next set of naked puts.

 

 

48.88 Feb 17 11 Expiry: 5 Naked Puts Feb 41 expired
5 Naked Puts Feb 40 expired
               

Feb 24 2011 A very nice drop in the price of Nucor and I am a lot more comfortable selling into March naked puts at this level.

 

 

Feb 24 11 46.50 STO 5 Naked Puts Mar 44 @ .55 1.2%     13.25     261.75 7581.25
Feb 24 11 46.50 STO 5 Naked Puts Mar 43 @ .38 0.8%     13.25     176.75 7758.00

Mar 17 2011  Looking at the stock I can see the lack of support. The best strategy remains selling out of the money. With the stock having so much volatility, option prices are excellent. The strategy is obvious - sell 10 naked puts split into 2 groups. One group about 3 strikes below the present price and the second group 4 strikes lower. This helps spread the risk of assignment and offers me some protection should the stock start falling.

 

 

Mar 17 11 45.24 Expiry: 5 Naked Puts Mar 44 expired
5 Naked Puts Mar 43 expired
               
Mar 21 11 45.50 STO 5 Naked Puts April 42 @ .63 1.5%     13.25     301.75 8059.75
Mar 21 11 45.50 STO 5 Naked Puts April 41 @ .47 1.1%     13.25     221.75 8281.50

Apr 15 2011  Nucor continues to stay above the $40 strike and the option premiums remain high enough to continue selling puts. Looking back the the one year chart on Nucor I can easily spot where I would prefer to keep selling my naked puts. The zone in red marks the best spots to sell since if the stock falls back I should still be able to roll my puts down and back into the 37.50 to 40 range.  Nucor has to make more money than just through reducing expenses. It has done a great job of doing that, but eventually there has to be growth. This is yet another stock that has not returned to its pre crash high and I believe all of these stocks are warnings to stay with the cautious approach and keep an eye out for any change in the overall market trend. I'll start with 5 contracts and see what develops next week.

 

Apr 15 11 44.85 STO 5 Naked Puts May 42 @ .50 1.12%     13.25   21013.25 236.75 8518.25
Apr 15 11 45.23 Expiry: 5 Naked Puts Apr 42 expired
           5 Naked Puts Apr 41 expired
               
May 12 11 43.75 Sold Puts 5 contracts 18JUN11 41 @.56 1.3%     13.25   20513.25 266.75 8785.00

May 18 2011 Nucor has been in a downtrend for 12 sessions or over 2 weeks. A lot of value has been wiped from Nucor. Yet this steel company has decent earnings and the potential to continue to provide decent earnings. Today's push lower saw a rebound in the stock and while all indicators point to a continuation of the downtrend, I think $42.00 is decent value in Nucor. I am holding the $42.00 puts for May which expire in 2 days. I sold to July at the $38 strike for 1.4%. I believe I will either see the May 42 expire or roll them even further out in time. The concern about the economy remains and this has kept companies like Nucor out of favor with investors. I like to take advantage of this to sell puts further out in time and lower in strike.

 

May 18 11 42.25 Sold Puts 5 Contracts 16JUL11 38 @ .56 1.4%     13.25   19013.25 266.75 9051.75
May 20 11 42.20 Bought to close 5 put contracts 21may11 42 @ .12 0.28%     13.25     73.25 8978.50

JUNE 9 2011 Nucor has continued in a downtrend. Because my strategy is to sell naked puts and try to gain as much income as possible for my position before finally accepting stock I decided to roll my June $41 puts which are now In The Money. By rolling today I avoided being assigned before June 18 (next Friday) which can and often does happen early. With today's roll I decreased the amount of capital in use with Nucor, yet I increased my profit margin and lowered my eventual cost basis in Nucor Corp Stock.

Jun 9 11 39.90 BTC 5 Naked Puts 18JUN11 41 @ 1.29 (3.2%)     13.25     (658.25) 8320.25
Jun 9 11 39.58 Sold 3 Naked Puts 22OCT11 $37 @ 1.88 4.9%     10.75   11,110.75 553.25 8873.50
Jun 9 11 39.55 Sold 2 Naked Put 22OCT11 $41 @ $3.91 9.4%       9.50    8,209.50 772.50 9646.00
Jul 5 11 41.35 Bought to close 5 put contracts 16JUL11 38 @ .05 (0.2%)     13.25     (38.25) 9607.75
Jul 5 11 41.35 Sold 5 put contracts 20AUG11 37 @ .38       13.25   18513.25 176.75 9784.50
Aug 19 11 31.51 Expiry: 5 20AUG11 Puts Assigned at $37.00   500 37.04 20.00   18520.00    
Aug 30 11 36.28 Sold 5 Covered Calls Jan $33 @ 4.05   500 37.04 13.25     2011.75 11796.25
Aug 31 11 36.50 Bought to close 3 naked Puts 22OCT11 $37 at 2.31 (6.3)     10.75     (703.75) 11092.50
Aug 31 11 36.50 Bought to close 2 naked puts 22OCT11 $41 at 5.05       9.50     (1019.50) 10073.00
Sep 2 11 34.07 Sold 5 Naked Puts 21JAN12 $35 @ 4.30       13.25   17513.25 2136.75 12209.75
Sep 6 11 32.45 Sold 5 Naked Puts 17SEP11 $30 @ .33       13.25   15013.25 151.75 12361.50
Sep 16 11 35.04 Expiry: 5 Naked Puts 17SEP11 $30 expired                
Sep 22 11 30.90 Sold 5 Naked Puts 22OCT11 $25 @ .31       13.25   12513.25 141.75 12503.25
Sep 28 11   Dividend 500 X .3625             181.25 12684.50
Oct 21 11 36.80 Expiry: 5 Naked Puts Oct $25 expired                
Nov 25 11 35.40 Sold 10 Naked Puts 21JAN11 $33.00 @ 1.01       19.50   33019.50 990.50 13675.00
Dec 28 11 39.56 Exercised 5 Covered Calls Jan $33 @ 4.05 - Stock called as today is dividend day and the dividend has more value than the covered call.       20.00   (16480.00) -2040.00 11635.00
                     
NUCOR TRADES BY YEARS
VIEW NUCOR 2011 TRADES
VIEW NUCOR 2010 TRADES

 

Disclaimer: There are considerable risks involved in all investment strategies. Trade at your own risk.
Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed or presented are financial advice, trading advice or recommendations. Fullyinformed.com is a private website. Everything presented and discussed are the author's ideas and opinions only.
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