Captain Capitalism

By popular demand, Captain Capitalism has returned. As we all know, yesterday, the third Friday of the month, was the day that all February options expired. So it's time to pick some new winners.

My first pick this month is Novastar Financial Inc. (NFI). NFI is a mortgage company which concentrates on the high end/risky portion of the housing market. At a price of $34.61 per share, you can sell the $35.00 March call option for $2.45. This is an option yield of 7.1% over four weeks or 92% at an annual rate.

My second pick this month is Netease.com Inc. (NTES). NTES is an internet company which provides games, services and business portals in Chinese. At a price of $40.07 per share, you can sell the $40.00 March call option for $2.75. This is an in-the-money option which yields 6.7% over four weeks or 86.9% at an annual rate. Alternately, you can sell the $45.00 March call option for $1.00. This yields 2.5% for the month, or 32.4% annually, or 14.8% for the month if the position gets called away.

One word of investment warning. The technology and pharmaceutical areas have been flat or down for the last three months. While you can make money in these areas, just be aware that you'll have to do it without positive market pressure for now.