TGIF: Saved By The Bell Or On A Highway To Hell? [View article]
I'm totally in favor of a transaction tax or anything else that gets robots out of the trading business. I'm a fundamental trader at heart and I would much prefer to spend my days simply looking for undervalued companies and making long-term bets.
While we talk about our short-term trading, because it's more exciting, we still advocate keeping most of the portfolio in longer-term investments and ignoring the daily, weekly and monthly nonsense in the marktet. Our Income Portfolio had one trade in the past 30 days and has hit it's year goal after 6 months - believe me, THAT's the kind of trading I like to do!
One of the reasons I went into the markets is BECAUSE you aren't supposed to have to work every day. HFT makes that almost impossible because, any time you're not looking - a computer comes along and tries to steal your money!
It's not healthy for the system to the point which it affects companies and discourages them from communicating with the public (less a statement be misinterpreted) and encourages generally bad corporate behavior that focuses only on short-term goals, because investors (especially electronic ones) have no patientce for R&D or capital investments that impact short-term profits.
We were just looking at TEF the other day. It's based in Spain but provides service all over Europe and Latin America. They are trading at $18.74 and pay a $1.69 dividend (9%) and they are projected to be flat at about $2.30 a share for the next couple of years, which gives them a p/e of 8.14 on $86Bn in revenues.
This is the kind of company we lock up into our Long-Term Portfolios because you can buy the stock for $18.74 and sell the June $15 calls for $4.50 and the June $17.50 puts for $2 and that puts you in for a net cost of $12.24 and, if called away at $15 (which is 20% below the current price!), you make $2.76 plus .85 in dividends, which is 29.5% in 8 months.
If the stock finishes below $17.50, another round will be put to you at that price and then you will own 2x at net $14.87 so, of course, you don't make a trade like this unless you REALLY want to own 2x for net $15 but, as I mentioned, that's a 20% discount and, if they continue to pay a $1.70 dividend, owning 2x for $15 is very nice.
See, now that's the kinds of trades we make all the time but, once we make them, there's nothing to talk about. In all likelihood, we get called away in June with a 29% gain and we simply move on to the next opportunity. It's not exciting, but it's how we put the bulk of our allocations to work. The day-trading is to just pass the time while we wait for good opportunities like this one.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
My my, aren't we testy.
Both links I used go somehwere when I click them and the 2nd link does have the chart I indicated but low on the page. I'm not sure that saying "Stockcharts-dot-com" really qualifies as providing a link but I'm sure it does in your mind...
So I see you use the logic that, since oil collapsed just as Bush was finally being shown the door, you will ignore the fact that for the other 7 years of his term oil averaged over 100% higher than the price you are using.
I guess I'll accept your logic and credit Obama with a 100% gain in the markets - making him the most economically successful President in history by your logic - so I guess we should make him Emporer for life and continue his reign of uniterrupted prosperity?
Lies, damned lies and statistics, Skookum - Mark Twain had your number 100 years ago...
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
I'll be writing about the mechanics in the morning as we have a great example of how the shell game is played.
Meanwhile, TBoone is part of the process - he gets his guest spot on CNBC whenever they need to jam up oil prices. Today he actually said "$300-$500 oil prices" if Saudi Arabia has a revolution - as if there is no such thing as unaffordable to consumers who, presumably, will pay $300 to fill up their tank.
Maybe along with hyperinflation that includes major wage increases but, in this environment - completely ridiculous but that's what TBoone and the peak oil crowd are pushing for - a World that is run with the sole purpose of scrounging up enough money to pay the oil men.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
Sleep is highly overrated.
I don't sleep much and I'm not up every night but when things are excting in the markets, I tend to get out of bed and go check the computer and, since we have Members all around the World, there's always plenty of people on-line to chat with.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
Wasn't that hysterical?
Burned us but we pressed our bets at $102, of course. At worst, we figure this is a pump job to stick it to drivers at the pump over Thanksgiving but, after that, things should normalize.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
Not 2 weeks but 2 more weeks. And actually, with a 700M - oh, excuse me, 698Mb SPR and all but 3M barrels of our daily oil supply coming from the US, Canada and Mexico (and another 1Mbd from our pal Chavez), OPEC could cut us off for 2 years and we'd still be fine.
That's why, when the price of oil spikes because of some rebels doing something in Nigeria - it's just total nonsense.
Oil trusts, meanwhile, are great investments, we play those all the time.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
So you just make up numbers? Is that the way it works? I notice you clevery don't actually link to a chart nor do you mention that 5.1% of $20 is $1 while 4.7% of $60 is $2.82 so your apples and oranges comparison is the one with a clear agenda, not mine.
Other than the 70s Iran thing and a brief spike in 1990, oil never saw $30, let alone $40 before your boy Bush came into office. As to Obama, the point is the laws need to be changed back to stop the manipulation - Obama hasn't done that yet but to try to fob off the fact that he took office after the Bush Economic Collapse that sent oil back to $30 and use that as some kind of statistic to show Obama somehow caused a 38% spike in oil prices - well, Skookum, let's just say that if you said gravity was still in effect I'd have to check for myself now.
Our Aggressive Virtual Portfolio Doubles in the First Half; Now Shooting for $100K [View article]
Yep, that's all there is to it. With a trade like that you are either on or off track so USO is currently $37.29 so you are paying .21 of premium with 4 days left to trade so you need USO to go up at least .05 per day to break even, which is about a .15 gain in oil so you're looking for $95.60ish on Friday (now $95).
The other thing to watch on a bull call spread is your net Delta. The Delta on the $37s is .59 and the Delta on the $38s is .31 so net .28 is how much you will lose or gain if USO moves up $1. That's kind of nice because it means if USO falls below $37, that's just down .30 and you should only lose a dime so if you figure that's your stop out (below $37) then you shouldn't be risking more than .15 to make up to .50.
Of course the Deltas change over time and depending on the VIX et al but it helps so know what to expect as, perhaps, if you make a quick .15 gain tomorrow on a pop to about $37.50, you would then know that's a nice move and maybe take the 30% gain off the table as you'd be ahead of your 4-day schedule.
Our Aggressive Virtual Portfolio Doubles in the First Half; Now Shooting for $100K [View article]
CMG/Convoluted - I like those trades too but I liked this spread as it was a chance to collect a straight-up positive payout on CMG so I have NO worried to the downside. If we did a put spread, then if it turns out this Emperor has no clothes - then we might end up scrambling to cover front-month sales that are deep in the money and we'd rather press our bets if CMG goes higher then lower as, fundamentally, we're pretty comfortable saying they don't justify a $10Bn market cap ($10M per restaurant vs. $2.7M per restaurant for MCD and $675,000 per restaurant for YUM).
Your idea of a bull put spread is good too but we tend not to bet against ourselves on the same trade, rather, for example, as we had these bearish trades into the weekend, we took advantage of today's drop to add a couple of bull call spreads on indexes to cover in the $25KP so now, if the indexes recover - we get paid and, if they don't, we assume our MoMo shorts will pay off.
Also keep in mind that, for Members, we're on top of these trades every day in Chat so we're not waiting if we have to make rolls or if an opportunity comes up to make profits.
Ah, I see from your second comment that you are more of an options strategist. I'm not that at all. I'm a fundamental investor who uses options for leverage and hedging so we don't pick CMG based on a slightly higher Theta profile or anything like that, we pick CMG because they broke over our max valuation of $300 and we were able to sell the $310 calls for $18.50 which gave us almost a 10% cushion but, because CMG is a very dangerous stock to short - we backstop the trade with the long calls because we are confident that we can work our way out of trouble over time.
So it's the stock that drives our selection and THEN we look to see if there's an interesting way to play the options.
In today's chat, for example, my 10:35 comment to Members had a trade idea to short NFLX July $300 calls for $5.50 because they had spiked up on a bullish GS call and we let those sheeple rush in and then took all their money. Those calls finished the day at $2.50 for a quick 54% gain and we're done because NFLX is a stupid Momo stock and there's no sense in being greedy.
So it just depends on the situation on a particular stock and how we decide to take advantage of it at the time.
Good explanation Josh but I don't like those vertical ratios too much as you have no Theta advantage, which can often save you - especially when the stock tends to have juicy front-month premiums to sell. Also, our goal is to try to keep things simple, mostly hit and run trades so if we make a quick $1,000 on CMG in the $25KP then it's mission accomplished and we move on to the next trade as we need to make 50 $1,000s to hit our goal by the end of the year so we can't really afford to set and forget a September spread and tie up a bunch of cash.
In case you are interested, our 3 longs today for this portfolio were:
DIA July $125/126 bull call spread at .50 (100% potential gain if Dow gets to 12,600 on Friday) USO July $37/38 bull call spread at .50 (100% potential gain if USO gets to $38 on Friday) TNA July $86/88 bull call spread at $1 (100% potential gain if TNA gets to $88 on Friday)
10 contracts each for $2,000 which can make $2,000 if the markets come back tomorrow and, if they don't, we'll probably kill them with a $300-600 loss. Of course, if the markets don't come back - our other trades will be looking pretty good!
Even WYNN got back on target this afternoon.
We also went back to the well on GLL, with 20 Aug $22/23 bull call spreads at .50 so bearish on gold at $1,550.
Will We Hold It Wednesday? Dollar Strength Does Damage [View article]
Just posted in Member Chat:
Wheeeee – $98.15 on oil, that was fast. We can put a stop on at least 1/2 at $98.25 now and then .25 trailing on the rest. We can always reload back below $98 or use the $98.50 line next time if they run back over. Congrats to all who played!
Will We Hold It Wednesday? Dollar Strength Does Damage [View article]
Our premise, by the way, is that there is no real demand for oil at $99, just speculators driving up the price so, when we offer to ACTUALLY sell them the barrels at $99 and hold the contracts, they begin to get nervous and try to get out of the positions.
Does that make me Robin Hood or a good guy - well, compared to you boys, I'm mother freakin' Theresa so I'm not looking for your approval - just trying to help make people some money in my own humble way.
Will We Hold It Wednesday? Dollar Strength Does Damage [View article]
We just went short on oil at $99 off that inventory report. We had the dip we wanted yesterday, got stopped out, waited for the run-up into inventory and went short again - not complicated, same cycle every week. The /CL Futures pay $5 per penny per contract and you can sell them at the $99 line, stop out at $99.20 for a $100 loss and we'll see how it works out at the end of the week.
TGIF: Saved By The Bell Or On A Highway To Hell? [View article]
While we talk about our short-term trading, because it's more exciting, we still advocate keeping most of the portfolio in longer-term investments and ignoring the daily, weekly and monthly nonsense in the marktet. Our Income Portfolio had one trade in the past 30 days and has hit it's year goal after 6 months - believe me, THAT's the kind of trading I like to do!
One of the reasons I went into the markets is BECAUSE you aren't supposed to have to work every day. HFT makes that almost impossible because, any time you're not looking - a computer comes along and tries to steal your money!
It's not healthy for the system to the point which it affects companies and discourages them from communicating with the public (less a statement be misinterpreted) and encourages generally bad corporate behavior that focuses only on short-term goals, because investors (especially electronic ones) have no patientce for R&D or capital investments that impact short-term profits.
We were just looking at TEF the other day. It's based in Spain but provides service all over Europe and Latin America. They are trading at $18.74 and pay a $1.69 dividend (9%) and they are projected to be flat at about $2.30 a share for the next couple of years, which gives them a p/e of 8.14 on $86Bn in revenues.
This is the kind of company we lock up into our Long-Term Portfolios because you can buy the stock for $18.74 and sell the June $15 calls for $4.50 and the June $17.50 puts for $2 and that puts you in for a net cost of $12.24 and, if called away at $15 (which is 20% below the current price!), you make $2.76 plus .85 in dividends, which is 29.5% in 8 months.
If the stock finishes below $17.50, another round will be put to you at that price and then you will own 2x at net $14.87 so, of course, you don't make a trade like this unless you REALLY want to own 2x for net $15 but, as I mentioned, that's a 20% discount and, if they continue to pay a $1.70 dividend, owning 2x for $15 is very nice.
See, now that's the kinds of trades we make all the time but, once we make them, there's nothing to talk about. In all likelihood, we get called away in June with a 29% gain and we simply move on to the next opportunity. It's not exciting, but it's how we put the bulk of our allocations to work. The day-trading is to just pass the time while we wait for good opportunities like this one.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
Both links I used go somehwere when I click them and the 2nd link does have the chart I indicated but low on the page. I'm not sure that saying "Stockcharts-dot-com" really qualifies as providing a link but I'm sure it does in your mind...
So I see you use the logic that, since oil collapsed just as Bush was finally being shown the door, you will ignore the fact that for the other 7 years of his term oil averaged over 100% higher than the price you are using.
I guess I'll accept your logic and credit Obama with a 100% gain in the markets - making him the most economically successful President in history by your logic - so I guess we should make him Emporer for life and continue his reign of uniterrupted prosperity?
Lies, damned lies and statistics, Skookum - Mark Twain had your number 100 years ago...
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
Meanwhile, TBoone is part of the process - he gets his guest spot on CNBC whenever they need to jam up oil prices. Today he actually said "$300-$500 oil prices" if Saudi Arabia has a revolution - as if there is no such thing as unaffordable to consumers who, presumably, will pay $300 to fill up their tank.
Maybe along with hyperinflation that includes major wage increases but, in this environment - completely ridiculous but that's what TBoone and the peak oil crowd are pushing for - a World that is run with the sole purpose of scrounging up enough money to pay the oil men.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
I don't sleep much and I'm not up every night but when things are excting in the markets, I tend to get out of bed and go check the computer and, since we have Members all around the World, there's always plenty of people on-line to chat with.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
Burned us but we pressed our bets at $102, of course. At worst, we figure this is a pump job to stick it to drivers at the pump over Thanksgiving but, after that, things should normalize.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
I won't run but, if elected - I will serve.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
That's why, when the price of oil spikes because of some rebels doing something in Nigeria - it's just total nonsense.
Oil trusts, meanwhile, are great investments, we play those all the time.
Which Way Wednesday: Popping Or Topping With The $100 Oil Scam? [View article]
Here's the longer-term chart of oil: http://bit.ly/rPWfRj
Here's another: http://bit.ly/t4ajct
Other than the 70s Iran thing and a brief spike in 1990, oil never saw $30, let alone $40 before your boy Bush came into office. As to Obama, the point is the laws need to be changed back to stop the manipulation - Obama hasn't done that yet but to try to fob off the fact that he took office after the Bush Economic Collapse that sent oil back to $30 and use that as some kind of statistic to show Obama somehow caused a 38% spike in oil prices - well, Skookum, let's just say that if you said gravity was still in effect I'd have to check for myself now.
Our Aggressive Virtual Portfolio Doubles in the First Half; Now Shooting for $100K [View article]
The other thing to watch on a bull call spread is your net Delta. The Delta on the $37s is .59 and the Delta on the $38s is .31 so net .28 is how much you will lose or gain if USO moves up $1. That's kind of nice because it means if USO falls below $37, that's just down .30 and you should only lose a dime so if you figure that's your stop out (below $37) then you shouldn't be risking more than .15 to make up to .50.
Of course the Deltas change over time and depending on the VIX et al but it helps so know what to expect as, perhaps, if you make a quick .15 gain tomorrow on a pop to about $37.50, you would then know that's a nice move and maybe take the 30% gain off the table as you'd be ahead of your 4-day schedule.
Our Aggressive Virtual Portfolio Doubles in the First Half; Now Shooting for $100K [View article]
Your idea of a bull put spread is good too but we tend not to bet against ourselves on the same trade, rather, for example, as we had these bearish trades into the weekend, we took advantage of today's drop to add a couple of bull call spreads on indexes to cover in the $25KP so now, if the indexes recover - we get paid and, if they don't, we assume our MoMo shorts will pay off.
Also keep in mind that, for Members, we're on top of these trades every day in Chat so we're not waiting if we have to make rolls or if an opportunity comes up to make profits.
Ah, I see from your second comment that you are more of an options strategist. I'm not that at all. I'm a fundamental investor who uses options for leverage and hedging so we don't pick CMG based on a slightly higher Theta profile or anything like that, we pick CMG because they broke over our max valuation of $300 and we were able to sell the $310 calls for $18.50 which gave us almost a 10% cushion but, because CMG is a very dangerous stock to short - we backstop the trade with the long calls because we are confident that we can work our way out of trouble over time.
So it's the stock that drives our selection and THEN we look to see if there's an interesting way to play the options.
In today's chat, for example, my 10:35 comment to Members had a trade idea to short NFLX July $300 calls for $5.50 because they had spiked up on a bullish GS call and we let those sheeple rush in and then took all their money. Those calls finished the day at $2.50 for a quick 54% gain and we're done because NFLX is a stupid Momo stock and there's no sense in being greedy.
So it just depends on the situation on a particular stock and how we decide to take advantage of it at the time.
Good explanation Josh but I don't like those vertical ratios too much as you have no Theta advantage, which can often save you - especially when the stock tends to have juicy front-month premiums to sell. Also, our goal is to try to keep things simple, mostly hit and run trades so if we make a quick $1,000 on CMG in the $25KP then it's mission accomplished and we move on to the next trade as we need to make 50 $1,000s to hit our goal by the end of the year so we can't really afford to set and forget a September spread and tie up a bunch of cash.
In case you are interested, our 3 longs today for this portfolio were:
DIA July $125/126 bull call spread at .50 (100% potential gain if Dow gets to 12,600 on Friday)
USO July $37/38 bull call spread at .50 (100% potential gain if USO gets to $38 on Friday)
TNA July $86/88 bull call spread at $1 (100% potential gain if TNA gets to $88 on Friday)
10 contracts each for $2,000 which can make $2,000 if the markets come back tomorrow and, if they don't, we'll probably kill them with a $300-600 loss. Of course, if the markets don't come back - our other trades will be looking pretty good!
Even WYNN got back on target this afternoon.
We also went back to the well on GLL, with 20 Aug $22/23 bull call spreads at .50 so bearish on gold at $1,550.
Will We Hold It Wednesday? Dollar Strength Does Damage [View article]
Wheeeee – $98.15 on oil, that was fast. We can put a stop on at least 1/2 at $98.25 now and then .25 trailing on the rest. We can always reload back below $98 or use the $98.50 line next time if they run back over. Congrats to all who played!
Will We Hold It Wednesday? Dollar Strength Does Damage [View article]
Does that make me Robin Hood or a good guy - well, compared to you boys, I'm mother freakin' Theresa so I'm not looking for your approval - just trying to help make people some money in my own humble way.
Will We Hold It Wednesday? Dollar Strength Does Damage [View article]
Will We Hold It Wednesday? Dollar Strength Does Damage [View article]