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Phil's Favorites

Dave's Daily

MARKET COMMENT

November 19, 2008, courtesy of Dave Fry at ETF Digest. 

 

Another Big Wednesday? Oh yeah! Of course what Laird Hamilton is doing in this video is an awesome ride of guts but ultimately beautiful at the same time. We can’t say the same thing about the stock market now can we?

more from Ilene

Trading Goddess

Post Comments

(no, no... that is not me!
Add a couple decades, dye the hair brown,
have a couple children and voila!
That's is me!)...

more from Goddess

The Options Report

By Andrew Wilkinson and Rebecca Darst



JPMorgan decline sets off bullish option bets for 2009

Today’s tickers: JPM, BBY, ACE, IRM, SHLD & CSCO

JPM – JP Morgan Chase & Co. – With the market in meltdown mode, investors are once again departing all shades of financial shares. There are new lows today at several major financial institutions including blue-blooded JP Morgan. The 52-week $28.87 low is a radical shift from the $50.50 52-week peak set three days into October. We’re not sure many financial companies can claim to have traded annual peaks and lows in such a short space of time, but this underscores the negative outlook for the economy and companies regardless of shade. Options on JPM are in play today with large buying of this week’s expiring 30 strike puts at 1.40 premium. Today’s investor interest at that strike is equal to the outstanding number of puts at the strike and shows h

more from Andrew

Stock and Option Trades
(Advanced option strategies)

Fuzzy Math!

Have you ever seen literature from a fund posting attractive gains and comparing its performance to that of the benchmark S&P 500?  Have you ever investigated how the figures listed were calculated?  If not, you will definitely want to read on! Let's take a fairly representative example.  Fund Manager Joe Bull, for example, is very good at generating profits in bull markets.  Let's say Joe Bull made 20% in each of the years 2004, 2005, 2006 and 2007.  But Joe Bull does not have the toolset to survive bear markets and finds in 2008 that he is down 30%.  What has Joe Bull's return been over 5 years? It turns out, the answer to that questions depends greatly on what Joe Bull wants to report as his return!  Why? Because little regulation exists to prevent Joe Bull from choosing any number of mathematical approaches to calculate his return! For example, fund manager Joe could simply take the average of his returns over 5 years.  This would be calculated as the sum of 2 more from Option Trades

Option Sage
(Strategy and Education)

Trivia Time!

Let's say you decide to deposit $100,000 into a brokerage account.  You decide you will check your portfolio on a weekly basis.  Now let's further assume that the first week has passed and you are about to log in to your account.  But before you do, you are told that one of two things has happened in the past week.

[1]  Your portfolio went up $10,000 and then dropped $10,000

[2]  Your portfolio went up 10% and then dropped 10%.

So, the trivia question is:  In case [1], what should you expect your account value to be and is that the same figure as in case [2]?

If you answered $100,000 in case [1], you would be absolutely correct!  If you answered that this is the same as in case [2] you would be absolutely incorrect!  Why?  Well let's take a look at what happens when the portfolio rises 10% first; it goes from $100,000 to $110,000.  But then we're told it drops 10%.  10% of $110,000 is $11,000 more from Option Sage


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