Posts Tagged ‘Option Strategy’

The $25,000 Virtual Portfolio – Halfway to $100K!

Here we go again!

After a very wild ride tracking our VERY aggressive virtual portfolio, we closed out the first half with $53,942 – up 115% for the first half of the year and, since we put $11,630 back in the bank above $25,000 from last year's $10,000 virtual portfolio, that brings us to a grand total of $65,722 – up 555% from the $10K we started with last year.  Our goal in this small, aggressive virtual portfolio is $100K but forget the extra $15,722 – as I said last week, that's our starting basis with a nice profit so we put that back into nice, safe, conservative investments (like our Income Virtual Portfolio) and that leaves us $50,000 to play with.  

Our first week of trades has already been very interesting.  Make sure you to read the original post and the update if you haven’t already to get an idea of what we are trying to learn by following this "hyper-aggressive" virtual portfolio model – especially last quarter's lesson on taking those profits off the table and working on those losers.  Our "biggest loser" of last quarter was, of course, FAS and those Aug $23 calls hit $5 last week (we are already out), which is $40,000!  Anytime you can roll and DD a position in a $25,000 virtual portfolio that eventually cashes out for $40,000 – you will probably come out well…

The problem is mainly in learning how to stick with a position like that and that requires a lot of conviction because there were dozens of opportunities to panic out with a loss and that's why we practice this kind of trading – you need to get the experience in playing these out over time so that you can learn to BELIEVE in the strategy and, even then, it should only be used in places where you REALLY have a very good reason to believe a stock or ETF will, eventually, come back sharply enough to make all the work pay off – because it's a LOT of work!

Of course, no one makes 100% every six months by taking it easy, right?  Practice, practice, practice with virtual trading until you get comfortable with the strategies and, even then, use them sparingly.  This aggressive virtual portfolio is meant to be a
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DARK HORSE HEDGE – After the BOOM!

DARK HORSE HEDGE – After the BOOM! 

Add Clinical Data, Inc. (CLDA) SHORT at the market, 7/30/10

Silhouette of Horses Jumping a Steeplchase

Clinical Data, Inc. operates as a global biotechnology company developing early and late stage targeted therapeutics, as well as genetic and pharmacogenomic tests that detect serious diseases and help predict drug safety, tolerability, and efficacy.

After taking profits on earnings sell-offs from AMAG and BOOM, we are adding Clinical Data, Inc. (CLDA) as the 8th SHORT in our currently BALANCED tilt.  CLDA is rated a STRONGSELL by Sabrient with a BALANCE SHEET score barely registering at 1.1 (out of 100) and almost non-existent FUNDAMENTALS score of 0.3 (out of 100).  These rosy figures combine with five analysts forecasting a second quarter loss of -$.63. That is coming off a mind-numbing first quarter loss of -$1.44 per share, compared with expectations for only losing -$.63.  These negatives provide us with a heavy dose of “preponderance of evidence” to believe CLDA is a reasonable SHORT at the market, Friday July 30, 2010.    

***** 

EARNINGS UPDATE: Ingram Micro (IM)

 

Ingram Micro (IM): LONG with Phil’s Buy/Write strategy in DHH virtual portfolio

As expected in our July 26, 2010 post, IM posted better than expected results and higher revenues after the market closed on Thursday.  Analysts had been forecasting a profit of +$.37 per share and revenue of $7.9B, but IM delivered a healthy +$.44 per share and revenue of $8.2B.  "Every region performed well, with our two largest regions doubling and tripling operating profits on double-digit sales growth," Ingram Micro Chief Executive Gregory Spierkel said in a statement.  That is the type of BOOM! (see BOOM! article this morning) statement we like to hear from our long stocks. 

We feel very comfortable with the position we put on using Phil’s Buy/Write Strategy. IM is trading +1.67% today at $16.44.  Recall that we took in $2.50 in option premium on Monday by selling the December 2010 $17.50 calls and puts.  On Monday, we wrote

Add LONG Ingram Micro (IM) at the market Monday July 26.

We like IM leading into its earnings announcement on July 29, 2010.  The 10 analysts covering


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How to Make Profits in Your Spare Time

 

Option Sage submits:

I saw an infomercial from Fisher Investments where Ken Fisher mentioned 3 attributes that he believes are keys to successful investing which can be crudely summarized as follows:

[1]  Focus on long-term investing

[2]  Expect surprises

[3]  Stay ahead of the crowd by knowing what others don’t

The first point is certainly critical and weeds out the greedy ‘get-rich-quick’ traders from the patient traders.  Our policy here is that of ‘play-to-win’.  We like to be aggressive in seeking profits with short-term plays but we also recognize that if those trades don’t work out that we can still rely on longer term plays to end up profitable in the end. 

The second point regarding expecting surprises asks the trader the question “Are you managing risk well and do you have contingency plans in mind each time you enter a trade?”  While the second part of the sentence is important, the first is paramount!  No matter what you do, never violate risk management rules which we have discussed here in the past.

The third point is a luxury in my view.  Of course, it would be nice to know what others don’t but it’s not critical.  By definition only a small number can have information that the rest of the crowd does not have so if you are not trading full-time you have to find another way of making money without relying on staying ahead of the crowd.

As I was scanning for trades over the weekend, I came across one trade which might in fact fall into the category of offering relatively attractive profits by relying on options rather than additional information.  In fact, I know many of our members find it hard to focus on the daily trades and would like to construct virtual portfolios with the longer-term in mind.  As Phil mentioned in his classic "James Bond Investing" article, playing short-term positions requires constant vigilance and you need to ready to turn on a dime with…
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Stupid Option Tricks – The Salvage Play

I often talk about stupid options tricks in member chat and I thought it would make for good weekend reading.

Today we'll look at salvaging bad positions, something that comes up once in a while in any virtual portfolio.  Not everything has to be buy, hold or sell with options – there is always hedging and there is always an option!  Since many of us are short on USO and not happy at the moment, I thought we'd focus on various salvage strategies for positions that go against us but, before we get into that, I did promise we'd discuss scaling, and the two do go hand in hand

Scaling into a position is always a sensible strategy, we can't be right all the time with our entries so we need to plan ahead for being wrong.  Also, we need to plan for our position going against us tomorrow, next week or next month.  Ideally, you should never be in any position that risks discomfort if you lose it.  If you have a large virtual portfolio, it's good to keep most of your positions under 2%.  If you have a medium virtual portfolio, 5% and, if you are in the $50,000 range or less, it will be hard to avoid having positions that are 10% of your virtual portfolio and that's where scaling is even more important so we're going to focus on the small entries and I'll assume the big boys can multiply by 2-10 by themselves.

$50,000 is not a small amount of money and we can assume that, if that is your stock virtual portfolio, that you worked hard to make it and you would rather not lose it.  This is all the more reason to take a more conservative stance with your positions.  As I said, you don't want any position to be more than 10%, or $5,000.  That doesn't mean it can never happen, but you need to treat anything over 10% as "uncomfortable" and look to reduce it when there is a good opportunity. 

When entering a new position, we want to be ready to be wrong.  Sun Tzu said: "Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat."  We made a nice profit on Tuesday morning on USO puts we had held
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Chart School

World Markets Weekend Update: The Global Rally Accelerates

Courtesy of Doug Short's Advisor Perspectives.

Seven of the eight indexes on our world watch list posted gains over the past week, up from five the week before, and the average of the eight was an impressive 2.60%. India's SENSEX was the outstanding out performer with a 5.34% surge, and three indexes, France's CAC 40, the Hong Kong's Hang Seng and Germany's DAXK closed the week with gains in the mid-three percents. China's Shanghai was the sole loser with its fractional 0.16% decline. Japan's Nikkei had the second worse performance with a modest gain of 0.59%. Incidentally, the Nikkei about 4% below its late January close when the Bank of Japan adopted its negative interest rate policy.

A Closer Look at the Last Four Weeks

The tables below provide a concise overvi...



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Zero Hedge

Bitcoin Is Soaring On Unprecedented Burst In Chinese Buying

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Last September (when bitcoin was trading at $230) we said that "As China Scrambles To Enforce Capital Controls, This Is Great News For Bitcoin" and that it is only a matter of time before Chinese buyers figure out that in a world in which the freeflow of capital out of China ...



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Phil's Favorites

Rauner Vetoes Bill Reducing Pension Contributions Despite Massive Underfunding, Chicago Mayor Whines

Courtesy of Mish.

Chicago pension plans are massively underfunded to the tune of $18.6 billion. Yet, the Illinois legislature passed a bill that would actually reduce contributions to the fund.

Governor Bruce Rauner made the fiscally responsible decision to veto the bill.

As expected, Chicago Mayor Rahm Emanuel points the finger at the Governor instead of looking in the mirror to see what the real problem is.

Pensions & Investments reports Illinois governor vetoes bill to reduce Chicago fire, police pension contributions.

Illinois Gov. Bruce Rauner vetoed Friday a ...



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Market News

News You Can Use From Phil's Stock World

 

FInancial Markets and Economy

Fed reaction to data barrage is focus for stocks (Business Insider)

Data on inflation and employment, two of the economic indicators most important to a "data-dependent" U.S. Federal Reserve are expected next week.

Here’s one really obvious way to boost the US economy (Quartz)

If you’re confused about why American economic growth has been so disappointing, consider this: US government investment in capital, research and development, and education and training is at its lowest point in 45 years. In 2014, feder...



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ValueWalk

Billionaire Stephen Schwartzman How To Spot the Trends that Other Miss

By Jacob Wolinsky. Originally published at ValueWalk.

Billionaire Stephen Schwartzman How To Spot the Trends that Other Miss

Published on Mar 27, 2016

Billionaire Stephen Schwartzman How To Spot the Trends that Other Miss [HD]

Stephen Allen Schwarzman (born February 14, 1947) is an American business magnate and financier. He is the chairman and CEO of the Blackstone Group, a global private equity and financial advisory firm he established in 1985 with former US Secretary of Commerce Pete Peterson. His personal fortune is estimated at $12.9 billion, according to Forbes.As of 2015, Forbes ranked Schwarzman at 100th on its World’s Billionaires List.

The post ...



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Kimble Charting Solutions

Gold Mining Stocks- Most dangerous time to own them in years?

Courtesy of Chris Kimble.

CLICK ON CHART TO ENLARGE

The rally in mining stocks since the first of the year has been very impressive.

The rally has taken Gold Miners ETF GDX up to test the 23% retracement of the collapse over the past 5-years. At the same time it is hitting the 23% level, two other resistance lines are being put to a test, with momentum at the highest levels in the past 5-years.

Joe Friday Just The Facts...



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Insider Scoop

Graham Media Group To Buy WCWJ, CW affiliate In Jacksonville, NBC Affiliate in Roanoke

Courtesy of Benzinga.

Graham Media Group, Inc., a Graham Holdings Company (NYSE: GHC) subsidiary, said it struck a deal with Nexstar Broadcasting Group, Inc. and Media General, Inc. to purchase WCWJ, a CW affiliate television station in Jacksonville, Florida and WSLS, an NBC affiliate television station in Roanoke, Virginia for $60 million in cash and the assumption of certain liabilities.

The agreement to acquire Nextar Broadcasting included pension obligations. Graham Media Group, Inc. would continue to operate both stations under their current network affiliations.

Graham Media said the acquisition is subject to approval by the FCC, other regulatory appr...



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OpTrader

Swing trading portfolio - week of May 23rd, 2016

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 ...



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Digital Currencies

The Biggest Bitcoin Arbitrage Ever?

Courtesy of Chris at CapitalistExploits

Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?

Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.

I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.

I was thinking of this since a buddy of mine recently started ...



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All About Trends

Mid-Day Update

Reminder: Harlan 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...

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Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



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Mapping The Market

About that debate last night

Although we try to stay focused on finding and managing promising trade ideas, the comments in the comment section sometimes take a political turn (for access, try PSW — click here!). So today, Jean Luc writes,

The GOP debate last night was just unreal – are these people running to be president of the US or to lead a college fraternity! Comparing tool size? The only guy that looks semi-sane is Kasich. The other guys are just like 3 jackals right now. 

And something else – if Trump is the candidate, that little Romney speech yesterday is probably already being made into a commercial. And all these little snippets from the debate will also make some nice ads! If you are a conservative, you have to be scared now. 

Phil writes back,

I was expecting them to start throwing poop at each other &n...



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Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



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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!




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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...

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