Guest View
User: Pass: | become a member

Virtual Portfolio Insurance

This is an article I was saving for the private site but news has forced my hand so I'm going to start picking up some of these next week. Insurance companies are always good in times of trouble and should hold up better than the Dow in a plunge (but will not be immune to it so we sell calls against or get out in a downturn). Currently the IYF insurance ETF is 10% behind the Dow's rally but usually outperform the Dow (move the time-line further out, resting neatly at the 10% rule. I'd like to give a shout out to my man Warren Buffett who took the time over the weekend to pump my beloved BRK.A, saying "you ain't seen nothin' yet" (I may be paraphrasing) while at the same time jumping on our bandwagon and taking a stab at Exxon for sqandering Billions on buybacks and dividends. Berkshire Hathaway was my stock of the year selection for 2006 and, although it was outperformed by some, there were none that made us feel safer through thick and thin! This puts a lot of pressure on my 2007 pick... I think that Warren Buffet taking the time out of his busy day to tell you his company is still a good 30% undervalued at $107,000 a share should tell you something about the markets, especially the insurance sector. AIG comes to mind as a possible play, with 2007 earnings projected at $6.26, up a mere 8% from 2006. "Yawn"you may say, but then you would be sleeping through the story! AIG only earned $3.33 a share in 2005, which was it's best year ever, but still fell from 2004 highs of $77 a share down to $49 during "the scandal." That was then, this is now, AIG is so similar to Berkshire that they co-insured deals and poor Mr. Buffet was even slightly tainted by that nonsense back in '04 but he's moved on and so should we with the AIG Jan '09 $70s for the "I'm Not Kidding Price" of $10.40. You can produce an income against them by selling the Jan $70s for $1.70 AND covering yourself with the Feb $75s for .40 but I would just do half as long as the stock holds $70 because you don't want to miss a nice pop. Now here's a freebie for my hedge fund buddies (as you need a lot of equity and patience to play this one). Buy the Jan '08 $70s for $6.70, sell the Jan '09 $80s for $5.60 AND the Jan $70s for $1.70 AND cover yourself with the Jan $75s for .20. That gives you .60 in cash on a $0 investment. The strategy is very complex but generally, you hope it stays flattish but you are playing to sell for the premium each month but with some protection. If it goes up, you can roll it, if it goes down you don't care once you get past the first month. As a reference, the Jan '08 $80s are just $2.40 so your goal is to make another $1.80 (you made .60 taking the position) to cover your eventual buyout of the '09's but everything else is pure gravy. This allows you to play the insurance game while laughing at natural disasters! If Mr. B's comments boost Berkshire, then there are several other nice companies we can take a look at: Insurance is a game of inches and the whole sector has been very out of favor in the latest rally as sexier stocks have gotten all the attention. Just like an old boyfriend, investors will come running back to these old reliables as soon as they have a fight with their new squeeze. AFL is certainly famous enough and trades right in line with the industry in p/e (14.72) but is growing about 10% faster than most. May $45 are $2.05. If they ever stop spending money on advertising, their cash flow should skyrocket! I meant to write this last week and there's a post-it on my screen with PGR (car insurance) written on it. They got a Bernstein upgrade last week (c'est la vie) and stopped at the 5% rule at $24. These guys are NOT doing a good job of growing but they have been unduly punished for it and have fallen way behind the sector. Jan '08 $25s are $2.05 and I'm not selling against them until they test $25. PRU got away from us last week but CB has made such a mess of their year that they are getting no respect, despite trading at a 20% discount (p/e 10) and, at $20Bn, being a more attractive takeover target. They are buying back 5% of their stock so the Jan '08 $52.50s for $4.50 seem safe(ish) but I won't rest easy until they break the 50 dma at $52.75. I am dumbfounded that GNW is still at $32! They added 13% to the bottom line this year and project another 10% next year on about 8% more sales. They missed last Q and I sometimes wonder if my love of this old GE division clouds my judgment but I have to take the Mar $35s for $.75. They should have a tough time at the 200 dma with a death cross 50 dma at $33.75 but there are 9M shorts who will be in a 5 day "House of Pain" if they break it. According to Yahoo, this stock is 101% held by institutions. Good luck to the retail shorts getting out of those positions if it takes off... I'm in no hurry on this one as I will happily get other $35s once it breaks out! TWGP just came down to where I want it with the Jan $35s at .85 that were $2 just 2 months ago before a 48% increase in earnings caused the stock to drop 20% as the company lowered guidance by a penny (I know, people are idiots!). I'm very sorry I missed it then! ALL is being probed in CT for pulling new policies in CT, NJ and DE as they are looking to get out of the storm business. Don't they have the right not to insure? Well the way they are doing it is sneaky - they are requiring Connecticut homeowners to install hurricane shutters to maintain coverage. That way they get to say you left them, they didn't kick you out! As an insured I say Boo! to the evil corporation but, as a shareholder, I say "why insure people we might have to pay?" If they come down closer to $63 I want the July $65s, hopefully for $1.50.
 
 
 

Chart School

RTT browsing latest..

Courtesy of Read the Ticker.

Please review a collection of WWW browsing results.Date Found: Tuesday, 13 January 2015, 01:43:37 PM

Click for popup. Clear your browser cache if image is not showing. Comment: Ouch! See the last point of demand between $60 and $70 In Dec at resistance, now strong selling, Large pattern forecast sees a price under $40

Date Found: Tuesday, 13 January 2015, 06:54:16 PM

Click for popup. Clear your browser cache if image is not showing. Comment: Coffe ETF bounces off support, minor spring, if get some strength to $40, a trade may be on!

Date Found: Friday, 16 January 2015, 02:28:29 AM

Click for popup. Clear your browser cache if image is not showing. ...



more from Chart School

Zero Hedge

The Swiss Franc Will Collapse

Courtesy of ZeroHedge. View original post here.

Submitted by Monetary Metals.

By Keith Weiner

I have worked to keep this piece readable, and as brief as possible. My grave diagnosis demands the evidence and reasoning to support it. One cannot explain the collapse of this currency with the conventional view. “They will print money to infinity,” may be popular but it’s not accurate. The coming destruction has nothing to do with the quantity of money. It is a story of what happens when interest rates fall into a black hole.

Yields Have Fallen Beyond Zero

The Swiss yield curve looks like nothing so much as a sinking ship. All but the 20- and 30-year bonds are now below the water line.

Look at how much it’s submerged in just one week. The top line (yellow) is January 16,...



more from Tyler

Phil's Favorites

Looks like we got ourselves a ballgame

Looks like we got ourselves a ballgame

Courtesy of 

On October 15th, I officially declared the Relentless Bid era over (see There She Goes, My Beautiful World).

It wasn’t a bold call, markets had been acting differently since at least last August. Selloffs were occurring with more frequency and less stocks were rising as we made subsequent new highs. The days of “just buy anything” in the stock market had come to a close, the return of winners and losers, volume and volatility, was nigh.

Fast forward a few months later and it looks like we got our...



more from Ilene

All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David

Insider Scoop

Morgan Stanley Asks, 'What's Driving Gold?'

Courtesy of Benzinga.

Related GLD Jim Cramer Shares His Thoughts On Gold, Kinder Morgan And Dollar Tree Mike Khouw Sees Bullish Options Activity In SPDR Gold Trust Making Money With Charles Payne: 11/13/14 (Fox Business)

While other commodity prices have further softened recently, Gold rallied – rising from December low of $1,174/oz. to touch $1,300/oz. Joel Crane, an analyst at Morgan Stanley, expressed pessimism that...



http://www.insidercow.com/ more from Insider

OpTrader

Swing trading portfolio - week of January 26th, 2015

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

Sabrient

Sector Detector: With the Fed fading into shadows, investors look overseas for new catalysts

Reminder: Sabrient is available to chat with Members, comments are found below each post.

Courtesy of Sabrient Systems and Gradient Analytics

By Scott Martindale

Last week, the S&P 500 put an end to its streak of weekly losses, despite giving back some gains on Friday. Thursday provided the big catalyst, with the ECB’s announcement of its bold new monetary stimulus plan. Investors were cheered and soothed for the moment. And U.S. fundamentals still look strong. But with Greece trying to turn back time, with volatility elevated (and likely to continue as such), and with the technical situation still dicey, the near term outlook is still worrisome.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart...



more from Sabrient

Market Shadows

Are You Trading or Gambling?

ARE YOU TRADING OR GAMBLING?

An interview with John Ehlers of Stock Spotter and Mesa Software

By Ilene

Ilene: John, in our last discussion about trading systems in general and yours in particular (Can trading be reduced to cycles, stresses and vibrations?) you mentioned Monte Carlo simulations and their use in measuring performance. Can you explain more about how you measure the performance of a trading system?

John: Let's start with comparing trading with gambling. The two have several things in common.  In both ...



more from Paul

Digital Currencies

Jitters After Bitcoin Exchange Suspends Services

So as I was saying yesterday (Bitcoin: The Biggest Clown Show In History?), Bitcoin has several obstacles on the path to potential success as an alternative currency. But I forgot to mention hacking and theft at Bitcoin exchanges and other technical problems. This is related to the lack of government backing and the fact that the value of Bitcoins is based entirely on confidence.  

Jitters After Bitcoin Exchange Suspends Services 

By 



more from Bitcoin

Pharmboy

2015 - Biotech Fever

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members - well, what a year for biotechs!   The Biotech Index (IBB) is up a whopping 40%, beating the S&P hands down!  The healthcare sector has had a number of high flying IPOs, and beat the Tech Sector in total nubmer of IPOs in the past 12 months.  What could go wrong?

Phil has given his Secret Santa Inflation Hedges for 2015, and since I have been trying to keep my head above water between work, PSW, and baseball with my boys...it is time that something is put together for PSW on biotechs in 2015.

Cancer and fibrosis remain two of the hottest areas for VC backed biotechs to invest their monies.  A number of companies have gone IPO which have drugs/technologies that fight cancer, includin...



more from Pharmboy

Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's this week's Stock World Weekly.

Click here and sign in with your user name and password. 

 

...

more from SWW

Option Review

SPX Call Spread Eyes Fresh Record Highs By Year End

Stocks got off to a rocky start on the first trading day in December, with the S&P 500 Index slipping just below 2050 on Monday. Based on one large bullish SPX options trade executed on Wednesday, however, such price action is not likely to break the trend of strong gains observed in the benchmark index since mid-October. It looks like one options market participant purchased 25,000 of the 31Dec’14 2105/2115 call spreads at a net premium of $2.70 each. The trade cost $6.75mm to put on, and represents the maximum potential loss on the position should the 2105 calls expire worthless at the end of December. The call spread could reap profits of as much as $7.30 per spread, or $18.25mm, in the event that the SPX ends the year above 2115. The index would need to rally 2.0% over the current level...



more from Caitlin

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>