Oil shot up to $110.55 yesterday.
The news was that a pipeline in Saudi Arabia had been attacked and oil had been running up all day into this "news," which, funnily enough, turned out to be fake. We caught the news at 3:05 in Member Chat (thanks Kustomz) and we had been waiting for oil to stop going up so we could short it. The turn came at the $110.50 in the Futures (/CL) and we caught a nice run down to $109 and I reiterated, at 3:36, with oil still at $109.88 my love for the USO April $40 puts, which were $1.08 at the time and finished the day at $1.15.
As Malsg pointed out in Member Chat: "The pictures of the fire are taken in daylight … but Saudi sunset was several hours ago … the oil market only stared going nuts after the close." A very good observation that gave us the resolve to stay short on oil – which is working out fantastically this morning as well.
We also grabbed an aggressive short spread on BNO, as it seemed the whole day's run had been BS, with traders in the know stocking up ahead of the fake news so they could unload barrels into the retail suckers who bought into the spike. Don't worry though – no one who bought oil up from $105 on Thursday to $109 ahead of the news will be arrested or even questioned – we'll just keep pretending the total farce of oil trading is a legitimate pricing mechanism, even though it costs people around the world hundreds of Billions of Dollars each year in excess charges (see "Goldman's Global Oil Scam Passes the 50 Madoff Mark").
Now, this is the part where I would usually point out how the economy is weaker than we think etc. but I'm not going to do that this morning because the S&P still over 1,360 and, if a stronger Dollar isn't going to stop this rally – nothing will. Even yesterday, I joked to Members that I wasn't going to highlight negative news items in red anymore as there was no such thing as bad news in this market.
As you can see from David Fry's SPY chart, we''re back testing the bottom of that channel today and, if we don't break down here, then we can go another week at least on the bull run. Just last Friday I was pretty sure we'd break under and we didn't and, as Dave says – it's just like 1999 – but 1999 was a great year to be in the markets, it was 2000 that sucked.
Last Wednesday we poked over 1,360 and I laid out 10 trade ideas with the goal of adding "one more bullish trade each day that we're over the line" as 1,360 and our other Big Chart lines made for excellent signals to take profits off the table. Before we buy, we hedge, of course and our two hedge plays were:
- SQQQ April $13/17 bull call spread at .70, now .50 – down 28%
- DXD April $13/15 bull call spread at .55, now .50 – down 10%
As I pointed out in the post, both of these hedges have strong upsides on their own and don't NEED bullish offsets but I did suggest the AAPL 2014 $300 puts (selling to raise cash), which are still $15, despite the fact that there are now 2,300 open contracts ($3.45M) – that funds a lot of bearish spreads! Another offset for DXD was the FDX April $80 puts at $1.10, those are down to .75 already (up 32%) and would have completely offset the loss of either hedge so far. T was another 2014 offset with the $25 puts sold for $2.15 and those are still $2.15 as we don't get much movement out of 2-year options. Our last offset was SKX, with the Oct $12 puts selling for $1.55 – the same price they are now.
So you can get better prices for the spreads and 3 of our 4 bullish offsets are the same price as last week – that's pretty good for a start. Now let's see how our 10 bullish trade ideas are looking after 7 trading days (see original post for logic on each trade):
- SKX Oct $10/14 bull call spread at $2.20, selling $12 puts for $1.55 for net .65 – still .65
- SU 2014 $25/37 bull call spread at $6, selling XOM 2014 $65 puts for $5 for net $1, now $1.86 – up 86%
- USO June $40/46 bull call spread at $2, selling SCO Oct $26 puts for $3 for net $1 credit, now .82 credit – up 18%. I like this one because you are long and short oil at the same time.
- AA 2014 $10 puts sold for $2, still $2 – even
- X Jan $25/2014 $20 buy write at $17.04/18.52, now $17.57 – up 3%
- PEG Sept $30 buy/write at $27.07/28.53, now $27.20 – up 1%
- HOV 2014 $2 puts sold for .90, now .85 – up 5%
- BAC 2014 $3/7 bull call spread at $2.75, selling $10 puts for $3.30 for net .55 credit, not .35 credit – up 36%. 36% seems like a lot but it's just .20 out of $5.10 (927%) of potential gains so still very playable.
- HCBK Jan $7 buy/write at $5.14/6.07, now $5.23 – up 2%
- FTR 2014 $5 buy/write at $2.43/3.71, now $2.50 – up 3%
Not much was missed so far if you didn't participate. "Unfortunately" nothing got cheaper, other than our hedges and, as expected, only our energy plays did much in the past week as we're still at the same top we were iffy about at the time. Still – we're over our mark on the S&P and especially if the Dow is over 13,000 and for sure if the Nas breaks over 3,000, we'd BETTER have bullish plays in our portfolio and these are my 10 favorites for a breakout.
Of course, during chat in the past week, we put up another 20 bullish trade ideas and we'll continue to do so whenever there is a good opportunity – these just make a good benchmark list we can keep an eye on but clearly, so far, there has been nothing wrong with remaining cashy and cautious as we test these major range-tops.
I am most worried about the Russell, as they have shown weakness this week and we've had some horrific dips that sure don't make it look like there's a whole lot of support above that 775 line. Also, on Dave's chart, you can see RSI and MACD curving over – that's not usually a good sign either but I'm not much of a Technical guy, just an old-fashioned Fundamentalist who thinks things are horribly overvalued at the moment but clearly, like 1999, the Fundamentals are out the window for now so we'll run with the herd and play the technicals until they fail us and THEN we'll party like it's January 2000 – or October 2008…
If you want reasons to be cautious, I'm not going to give them to you (been working hard to get myself more bullish) but there's a great presentation by Jason Leach of Cravens Brothers called "Sleepwalking Toward a Precipice" that gives a great overview of where we are and how we got here.
Even now, oil just spiked back to our shorting spot at $108.50 (as noted most recently in yesterday's post) on another ridiculous spike up from $107.60 and that's one bearish bet we will keep making. Our other bearish note going into the weekend is that, once again, our Treasury has another $140Bn worth of debt to pawn off next week in 4 days worth of auctions and we already got another nice entry on TLT, as they tested $115.50 yesterday – as that has probably been the easiest money of the year so far – betting TLT to go up when we're selling our notes.
Next week, now that Greece is fixed, we should be hearing more about Spain, who are missing their 2012 budget goals by a mile, with a 5.8% deficit now forecast this year and -1.7% GDP projected to go with their now 23% unemployment. Phil Coggan is not worried about Spain – well, not when "the entire European Ponzi scheme is running out of suckers" and if you need to get gloomy this weekend – try his new book "Paper Promises."
“The massive debts accumulated over the last 40 years can’t be paid in full, and they won’t be paid,” Coggan says. “The debt crises of Greece, Ireland and Portugal are just the start.”
Coggan, the Economist’s Buttonwood columnist, is too levelheaded to predict a financial Armageddon. He does foresee a tipping point as wrenching as the collapse of Lehman Brothers Holdings Inc. (LEHMQ), complete with plunging markets, plummeting industrial output and corporate bankruptcies. No wonder it has taken $1 trillion in cheap money from the European Central Bank to get lenders to buy Italian and Spanish debt.
Have a great weekend,
Let's see if that gets picked up by Fox News Phil….
Very nice study Pharm, thanks!
Rolling/EM – A 2x roll is selling short, for example, 25 $57.50 calls and then the stock finishes at $59.50 but you don't think it will go over $60 so rather than roll your $2 caller to the next month $2.50 $57.50 caller, you roll the 25 $2 calls to 50 $1 $60 calls. It doesn't have to be exactly 2x, the idea is just to do a cash-even roll to a higher strike by adding more short calls. If you also add a new offsetting long bull call spread to cover, there is little additional danger to that strategy.
Gringo/Yodi – Ah, well there was the presumption that you "locals" know how to navigate the legal BS in those Central American nut-houses you choose to live in. Would I do it? Certainly not from here! This is why people live in the US and pay those nasty taxes to the big bad Government – because they enforce property rights and contracts! That let's us invest and grow our money without having to worry about it being stolen from us at each stage of the transaction and what allows us to leave the house without a contingent of armed guards and sure, we may need a bigger retirement fund – but we save so much money on the kidnapping fund. As to transfers, there are much better ways – if you are ever in NY, we can get together and I can tell you a few.
Iran/ZZ – Now the focus will shift to who the likely President will be in 2013. The new Parliament comes in in June and I can't imagine an attack until we at least hear what they have to say. For Iran, it would be an excellent time to extend an olive branch – it's even possible for them to impeach Ahmadinedjad now so he doesn't really have the option of cranking up the rhetoric between now and then unless he wants to hang himself, HOWEVER, he may start a war on the assumption that he can convince people not to change horses during one – that's still a possibility but only stays with him through June.
Of course this whole election was a joke as the two actual opposition leaders have been in jail since last year and weren't on the ballot. So it's like us going to the polls in November and getting to choose either Romney or Santorum because Obama's off the ticket and the Dems didn't have anyone brave enough to oppose the Reps. That, of course, can't happen in this country – until 2016 anyway…
Default/Kustomz – It's not a default unless the people who issue the CDS's say it is.
Thanks Barf – as long as you learn something, right?
Speaking of elections:
This was cool:
All – can we get feedback on the newsletter for its appearance/layout now vs. past letters? Do you like one vs. the other? Would the newsletter trade cycles be better as longer term ones like the income portfolio? Thx.
Even Andy Card, Bush's former Press Secretary couldn't save his cousin Alice (Susan Lindauer – CIA Asset) from the Wonderland of the federal government and the intent and operation of the Patriot Act. Google (You Tube) "Susan Lindauer" about her self published book "Extreme Prejudice" (appears mainstream news and publishers don't believe her story is newsworthy) and view her Seattle talk to Vets For Peace…. the information covered is very disturbing, if credible…… This link was provided by a Zerohedge viewer in a comment section……
Tried to log in tothe weekly newsletter….. am directed to message…."problem with sites security certificate"….. ???
acobra – I had it as well. Click 'OK' and add it to the exceptions. You should not see that again.
Phil, I did have a giggle on the south of the border, I do have though a few advantage that is having a Mexican wife and a German passport.
That brings me to Transfer.I assume You do have a different passport, which has certain advantages and disadvantages,
But I am never to old to learn. However I have a fear of coming to NY. The last time I was there same odd 30 years ago I landed from a long overnight flight and at the hotel the luggage man took my belongings and brought them up to the room. Having not a chance to change big bills I had only US coins in my pocket and gave it to him. After I came back from having a meal, I noticed that all the coins I had given to him were thrown in front of my door with a note "you need them more than I do". That is when I first thought things were going to well in the big USA.
Surely it can not be as confidential that we could not discuss the matter via skype.
I did have some more thought on your business idea, which from my side still needs some fine tuning but in rough I will present it to you and the members for further commentary to see what some might think of it.
Talking about tipping. I noticed lately that we do have an overflow of waiters in our shop, changing their 1$ bills for pesos, as it has become more difficult to change US bills with just about having to present your dead grandmother's birth certificate . Phil I am referring to the 1$ bills not the 5 ten and twenties, does that tell you anything?
Here is the link to the SWW Newsletter Trades. I think it shows that most are longer term. I am updating the ones out of date.
Phil, I have tried to create a new format for the $25KP portfolio. It now shows potential price targets for our positions and I have used color to show if the targets were reached at any point in the holding time. This allows us to see if we missed any opportunity to get out and will also let the members decide when to get out with a profit (or a loss).
A good example of a missed opportunity is the GMCR 65 puts which were showing a double at one point and is now negative. So anyone with alerts setup could have gotten out with a nice profit. Same thing with the DIA puts which at one point showed a 25% profit. On the other hand, the sold GLL puts were at -50% at one point and are now showing a profit, but I guess not as important on sold puts as they can be rolled. But this could also show when you want to DD or roll. The BCS are shown as a percentage of their potential value – not the profits.
This is not ideal, but unless we are ready to handhold everybody on every position, I don't think that there is an ideal format. Using this spreadsheet, members can set alerts in their platform for the levels that they are comfortable with in profits and losses. And set stop loss orders once we get to a certain level. This table doesn't show P&L as people will get out at different times.
Let me know what you think as I am opened to suggestion to replace the current system.
StJ – I like it and I think it drives home a point , but I think with all the numbers in there it makes things very 'busy'. We need to decide what type of trade it is, day, swing, intermediate or long term. If people are showing a profit, they need to consider taking it off the table. JRW's targets are even shorter, but most that Phil notes are day or swing trades. If they are buy writes, those fall into intermediate to longs. Just my two cents.
Pharm, I assume we should use this forum for feedback on SWW, since I didn't see any options for feedback on the emails that were sent out. My feedback is the following: Personally I get enough economic background from Phil's daily articles and various comments and quotes that come thru the daily Chat. I find the economic background interesting to say the least but since I have no background in economics I don't always understand the material. But I think more important than that is I joined PSW to broaden my trading/investment skills and I would prefer to see SWW dedicated to that rather than to macro economic issues. What I appreciate the most from SWW has been the rehash of various trades suggested by yourself and/or Phil, in which we get to see what trades were suggested and why they either worked or did not work. I also enjoy the various market prognostications. During the week in chat, I regularly copy and paste several of Phil's more general comments on how to manage spreads, when to roll and that kind of thing, because for me that is the most educational. So, I would also like to see a collection of such explanations in the SWW. That would mean reviewing chat each week and culling the most educational remarks that occur – they tend to occur randomly when someone asks a question and Phil or whoever then answers and it occurs to him to wax educational on the subject – my suggestion is to use SWW as the forum for collecting such gems. Right now I think we have gone on the premise that they are somehow collected in the Wiki, but I never see any reference to that, so using SWW for that purpose might be a good idea.
Having said all that, I can also live with the current style of SWW, who knows maybe it will turn me into a macro economist. But what I really need is to manage my own micro economy…
Barry has some interesting questions about sovereign debt CDS:
Again, I wonder loud: Why would one want to own something that has a payout determination made by this group of fucktards objective, ethical, unbiased committee members?
All of which raises a few issues in my mind: I do not know the answers to these questions, but they sure are intriguing:
I do not know the answers to there queries, but they sure are fun to think about . . .
Spreadsheet / Pharm – It might be difficult to classify all these trades, but in the 25KP none will be buy/write. I could run some stats in the current spreadsheet, but I would be shocked if the average holding time is more than 15 days. I would say there is mixture of intermediate and swing trades in there.
I agree, all the numbers make it busy, but I am not sure how else I could show that. I could not display the prices and use only colors, but then how do we know what the targets are. Like I said, not ideal but at this moment I don't have a better idea. Maybe that will come with some feedback!
Yodi – a note you might appreciate from a guy who didn't like NY thirty years ago but now enjoys traveling there once a year or so…NYC is not what it was thirty years ago and I mean that in the positive sense. I think it is much improved. I also remember issues with tipping…for example when you wanted a trolley in the airport you had to slip a fiver to a random attendent who a gathered them all together for himself. And the taxi from the airport regularly put two customers in the car, driving first one and then the other to their respective destinations, at the same price as if each took a taxi independently. I even remember a magazine article wherein a construction exec described how he had to pay a "worker" fifty bucks to go up a construction elevator to check out the project. It was chaos, but I no longer experience that in NY. The trolleys are $2 with cash or a credit card, taxis are expensive but organized, things seem to operate in a civilized manner. I think that all occurred when Giuliani was mayor. Anyway, I recommend not hesitating if you have to visit the big apple there are worse things you could do in this lifetime and you might even enjoy it…
Jerconn – thx. I agree on the learning factor of trades – but in my 'marketing' of those that I show the newsletter to , these readers (of a weekly) are not going to be interested in what trades we did during the week – the trade is typically over. I think a weekly should include tidbits from the daily writings, as well as from a few chat items, but most should be macro items. It should then have specific trades outlined – that are out in time (intermediate to income portfolio types). I also want to keep track of those trades like we do in chat for those that enter them, as it shows how well we are doing in real time. Many services claim hundreds if not thousands of percent gains on trades, and those sites do not include their losses on other trades – believe me, I have joined a few of them. That is not real world.
It is a work in progress now….And to all – this is the place to comment on SWW. Again, thx for your input, it is important to us.
Pharm – I don't mean that we should just repeat the trades that were already suggested in Chat. I mean that since the trades are already over and done with, let's have a look at them and evaluate them, why either successful or not…that's what I meant. But of course if the majority are not looking for that then you have to cater to the majority…
Portfolio spreadsheet / Pharm and Phil – Another solution to track the $25KP trades would require a little more work from Phil when setting up the trade but would make it easier to track. By specifying a time limit (optional as options expire anyway), a profit target and a kill or DD target, we could then track it more accurately. It doesn't have to involve a great deal of work and we could use codes that I could flesh out. For example:
$25KP – Buying 10 DIA Mar 128 Puts at $1.00 (PT 25 / DD 25 / K 50)
This would mean that we take profits at $1.25, DD at $0.75 and kill the trade at $0.50. Phil doesn't have to calculate the targets, it's done in the spreadsheet and then I can set alerts based on that. We can always adjust these as we move along (for example, a big sell-off could yield a double but then we know to setup a stop loss at the original target), but at least it gives us some guidelines. In any case, I like having targets when I setup a trade to begin with. It doesn't look complicated.
jerconn thanks NY it shows you times get harder now a days
jerconn – gotcha. Thx – ur input is appreciated.
For member interested in strangles in stock having weekly options I have created a new spreadsheet with a volatility study. It can be accessed at:
You might need to copy the link in your browser for the link to work as sometimes clicking on it doesn't work.
Here is a screenshot with an explanation:
I indicate the ticker, the date for the quote, the volume and the average volume over the last 50 days.
The Vola 5, Vola 10, Vola 50 and Vola 100 indicate the average weekly percentage change (up or down) for the specific stock. For example, with AA, over the last 5 weeks you could have expected a 2.46% change either up or down. Over the last 100 weeks that percent change is 3.74%. I have added columns to calculate the prices reflected by these possible changes. Once again, for example, you could expect AA to vary between $9.99 and $10.49 next week.
These values are given for information only and don't represent possible trades. But they can help make a decision on the value of the options.
Jerconn: So what's up with NYC gypsy cabs at the airport? There are signs everywhere saying "Don't take a ride from a non-taxi." But you can't look up to read one of them sign without bumping into some guy asking if you need "a car." It's not like the police would need to go undercover to find them. This isn't new; this has been going on a really long time. I took one — once. He couldn't figure out where New Jersey was [headed for Newark airport]. It could be eliminated in 30 days, no problem. I only wonder why there aren't an equal number of guys selling crack and loose joints in the taxi waiting line — but there aren't. It doesn't add up, since they could eliminate the problem for with less money and effort than printing all the warning signs. What's going on, J?
StJ – nice…..
Thanks Pharm! I plan on posting the same study with monthly moves for the S&P 500 and most traded ETF. But not today…
StJ: Nice strangle spreadsheet! I'm going to take a detailed look. Much appreciated!
zero – I know it's true those guys approach you but if you just ignore them and proceed to the taxi line nobody bothers you in my experience. I guess the cops just don't care about those guys and they do care about guys peddling coke and whatever…whereas before you had trouble getting an honest taxi driver at all…
good work, nice spreadsheet – provides a great framework to analyze trades, and as you said, let each person use their own risk/reward to decide when to exit – and also take some pressure off of Phil.
At least Phil's not the only bear in town: Excerpt: "Are you buying this rally? Insiders aren't.
The S&P 500 is up 25% since its October low, recently hitting its highest level since before the financial crisis. Yet the people running America's listed companies are selling shares at the fastest pace since last May, according to TrimTabs Investment Research. Company insiders sold $6.8 billion of their companies' shares in February. And for every $13 of selling, there was just $1 of buying."
Great graphic about the cost of healthcare in the US as compared to other countries:
It's dynamic, but here is a screenshot. The US is in red. In blue are Germany, France, Spain and Switzerland. The grey ones are Argentina, Chile, Canada and India. Not sure why a day in hospital in the US is 4x more than in Switzerland….
Pharm – on SWW – I agree that it should be a place of longer term trades, as so many day trades are no longer relevant that it becomes just a historical summary. Also I agree with jerconn's comment that there should be a review of a trade's approach or an educational element. Maybe something like a strategy corner where Phil, or someone else, explains how/why something was rolled, DD, or closed & why, or why one trade was set up as artificial or with the underlying. If I understand correctly the audience for SWW is more broad, so a little more explanation on basics may be appropriate.
If the purpose of the newsletter is for preparation of the upcoming week – then the econoday calendar should be always included, with the potential it has for effects on the market.
Thanks for all you guys do – you are a big part of what makes PSW valuable to me.
what are your thoughts on PDLI? Thanks
Disturbing/Acobra – So is "The Fox Effect" a new book by David Brock, who wrote "Blinded by the Right: The Conscience of an Ex-Conservative."
Security/Acobra – They seem to know about it, there's something they have to file to get it approved but it's not insecure, just not certified secure.
Ideas/Yodi – Yes it is that confidential, I probably shouldn't have mentioned it in the first place – very high-end stuff, not for many people and certainly not for publication or dissemination. As to tipping, you were cheap and the guy let you know it – stupid of him to leave a note as he could have gotten fired but you check into a $300 a night room (his entire week's salary) and give the guy change – what do you expect him to do? Maybe Mexican coins have more metal value than $1 bills…
Chart/StJ – That is very nice. I love that kind of study and simple, basic rule should be set a stop at the bottom of your bracket every time you take a new one but I'd go 20%'s on the long end and maybe eliminate down 100% as dead is dead anyway. Would it be possible to bold the box or outline the box the trade is currently in? Anyway, that's totally great, I love it!
Barry's questions/StJ – Well #s 4-6 are exactly my point in being short TLT and being long hyperinflation – there's almost no way this doesn't all blow up in people's faces. Unfortunately, I was a bit early with my call as I can't believe people buy US debt either! I noted Barry leaves out Japan, on purpose I'm sure. I've always said that CDS's could never be paid and therefore all debt is mispriced to the actual risk and, once people actually realize this, the easy money train will come to a very abrupt halt.
Oops, dinner time.
Phil ONCE AGAIN THANK YOU!. My light bulb just got a little brighter. I am now at 35W LOL. This place is fantastic. I have learn more in one month than in the last 25 yrs of trading. Everyone, StJeanLuc, Pharmboy, Iflantheman, Etc etc. Much appreciated.
Spreadsheet / Phil – I'll clean it up based on your instructions and add some highlighting for stops and current positions.
stjean/health care costs
Interesting. I know when I worked in Bermuda in the 80s I was surprised that the cost per night in a hospital bed was only about one third of the cost of a hospital bed in the US. Surprising because wages of health care professionals were considerably higher in Bermuda than in the US at the time (I think they still are.) Bermuda had (probably still has) mandatory insurance with employment that covered 100% of hospitalization with no copayments etc. and the insurance was not very expensive. The government covered costs for those who did not have insurance via an "indigent fund." The system seemed to work.
Phil Tipping ect At does day I would not even have dreamed off to check in to a 300 a night hotel. I remember checking in to a hotel in Austria and at does days the SA rand paid 4 DM so for me everything looked cheap in Europa. We checked in to a Hotel in Austria paying 120 DM and I never forget my late Father saying to me D for that money I rather sleep in the car.
PSW business plan.
As we have seen and discussed on various occasions before, many of our members have the urge to set up a new type of business machine, working independent from their trading and daily live. Picking up from Phil’s idea I have developed a plan to bring the idea a bit closer to reality. Following your individual commentaries on the PSW site, I can see many members are blessed with a somewhat special gift and knowledge, which could contribute to this new venture.
I take it most of us are on this site to improve our skill in making money, based on Phil’s Knowledge as well as the knowledge and support of many other members.
Yes some of us just starting and coming with for the ride, hoping to develop their knowledge and skills overnight.
Yes some members have a hard time of learning, lost their money or a great deal there off, in the hope to hit the jackpot tomorrow, even left our membership.
Yes and there are others who are just spies, in one or the other way, which interpretation I leave for each one of you to analyze.
My plan is to set up a business operation, working out of the box like view and thinking of the USA, joining with members who having the knowledge and even members with a more passive participation, to form a group, possible developing the operation in the line with Phil’s thinking.
It is not my intention to disclose the principals of this operation on a public website. Knowledge I have accumulated over many years of my life, which could very well fit in to the base idea of Phil and will make this business very successful.
The other day I saw a long list of members registering in one or the other way to Phil’s idea.
The base idea of my plan is to set up a successful business.
To succeed we need four things.
1. The principal business plan and it’s set up, to give an international advantage
2. Each participating member needs to put his/her money where their mouth is, receiving a business or better share participation in relation to the money invested
3. A group of knowledgeable members, directly contributing to the running of the operation. The actual ears and eyes of the business, working on an exclusive and a member restricted website, set up only for this business operation.
4. A small group of members surrounding Phil to make the final decision in the final move of decision making.
The principal idea is to set up a similar operation like the big shots have, legal but using all the loopholes which are available and needed to make money, giving a regular return to members participating.
Why I am suggesting all this. I run my ship by myself. Having learned and learning on the way. I cannot complain. Yes sometimes I lose and have to give money back. Even that some members have as their first rule DO NOT LOSE MONEY. But especially if you are on your own, you will not have the force of a team. I would like to set up a team, working and having many eyes and ears, avoiding many potholes you can not see by yourself.
If Phil permits I will discuss my plans with him on a one by one basis, and if he agrees we set up a future members meeting.
To exclude any nose pickers we will set up an Obama type principal Tickets for dinner charge of 10,000.00 per head. Somewhat a nonrefundable fee, however the payment will be accredited to your share value being a percentage of what you are investing in the new venture.
At this meeting you do not have to decide if you join or not, it is only a question of how much you are going to invest.
Travel, accommodation and dinners are for your account and not out of the 10K.
Minimum startup participation expected to be somewhat 20,000.00 depending on the number of members.
I am looking at a minimum of 25 members
Two things we expect from this venture
A) a steady quarterly return in cash, relevant to your participation, paid out anywhere in the world.
B) a capital gain of your share’s value.
Your commends are welcome.
Jeanluc: another great effort, thanks. I suggest the "freeze panes" option so the cols and row labels are fixed. Is that now the new list of the weekly optionables? I notice no SPX, but of course that's different. For those who don't play these already, I think its a nice tool and it is theoretically possible to discover mispricing. On the other hand, the prices of the options often direct me to the right strikes. When you strangle something, you don't claim to know anything, you are just playing the odds.
General: I have made an embarrassing amount of money in a "soft strangle" of TLT. I short some call north of 120, and short some puts south of 117. Ever since I lost my shirt shorting only calls this summer, this has been magical. It is not systematic and not always on. The rolls are painless and come up frequently. In fact, we ought to turn JRW on to this for daytrading? (shouldn't he be JR from Dallas?) And while I think of it JR, do you have the tech to trade at sea?
Phil: on healthcare: what is the source of your cost data? Of course you realize that there are charges for services, and only the uninsured actually are asked (and that's a LOL on everybody) to pay charges. I had a recent procedure in Florida, and the charges were 10x what Medicare allowed, and regular insurance has the same deal in force.
Oh, and Phil: My agent negotiated the cost of the title insurance to the other side since I didn't have a loan. The SELLER has to pay it. This system should be reviewed by honest government operatives because it is a scam. Of course, there are no honest rulemakers, only honest clerks.
I was reviewing the BRK.B trade mentioned in last weekends 'Weekend Reading' article. I am not sure if i am understanding some of the math. Here was the trade suggestion.
Berkshire/Pstas – Seems like a better buy than the S&P to me. I think they have a 10% pop in them if the markets keep going. You can sell the 2014 $70 puts for $5 and buy the June $75s for $6.80 with no offset and it's $1.80 of premium that should be mostly paid for by the decay on the $70s over 6 months (assuming Berkshire holds $80) and you get most of any move up with a .80 delta. As long as you stop out the longs at $3, the only risk is owning BRK.B for less than net $72.
I am not sure how the $72 figure was arrived at. If we stop out of the longs at $3, that would be a $3.80 loss on the calls. If we Sell the $70 puts for $5, wouldn't our risk be owning BRK.B at around (70-5+3.80=) 68.80? What am I missing?
thanks in advance 🙂
Phil / StJ
I just wanted to thank both of you again for doing the $5kp portfolio. If there is anything that i can do to help with that, please let me know.
Just FYI, I had gotten out of all TLT trades prior to this week, and was able to get a fill on the suggested 116/117 BCS @ $0.49. I will post asking for advice if things are looking iffy. I will be looking to sell the first opportunity that $.95 is available.
Thanks again and please let me know how i can help keep the $5kp going.
The issue with TLT is that it is totally dependent on government action, or maybe only government spin. Perhaps it makes sense long term to believe that interest rates have to rise (and TLT goes down) and then, that short term, the government cant allow rates to rise because they have these inconvenient auctions every so often…. (and TLT spins higher).
There is no fundamental basis to play TLT up or down in the short term, hence the trading strangle. And, my GOD they are weekly. If the earth moves, all bets are off, but otherwise I like the soft strangle.
yodi, here in SW Florida, Germans are famous for low tipping. I'm sure it's a cultural thing, and not simply cheap Euro bastards as my waiting friends like to say. You just have to understand the system in US restaurants. The owners pay wait staff next to nothing, and expect they will be tipped 15% to 20+%. I have not been to Germany, but I suspect it is different there. Just saying.
Weeklies / Barfinger – I used the list from the CBOE web site so if any symbol is missing it is their fault.
I have to check to see if it is possible to freeze panes with Google docs.
OH, and my vote regarding those maintaining portfolios: Post the entry, and if known, the goal. Exit is the total responsibility of the member.
If an exit signal is recognized by the trade boss, it should be posted. If I miss it, or don't agree, its on me.
Barfinger- how do you define a soft strangle?
tipping/Barf: Its a great way to avoid paying taxes.
For my man Phil, here is yet another example of a broken system and public employyee compensation that is out of control and amounts to simply hosing taxpayers.
From the LA Times:
Approaching retirement, Ventura County Chief Executive Marty Robinson was earning $228,000 a year.
To boost her pension, which would be based on her final salary, Robinson cashed out nearly $34,000 in unused vacation pay, an $11,000 bonus for having earned a graduate degree and more than $24,000 in extra pension benefits the county owed her.By the time she walked out the door last year, her pension was calculated at $272,000 a year — for life.
Robinson, 62, is among a group of public employees who have increased their retirement paychecks by adding such things as vacation time, educational incentives, car allowances and bonuses to their final salaries.
Such “salary spiking” was banned in 1993 by CalPERS, the state’s largest public employee retirement system, to help control spiraling costs. But 20 of California’s 58 counties — including Los Angeles, Ventura, Orange and San Diego — do not participate in CalPERS and their employees may legally continue to spike their salaries.
Cap: Are you trying to demonstrate what most people already understand? Salary spiking is probably a topic on public employee forums nationwide. Hey, if the system allows you, why not scalp? The taxpayer is the sucker at the table.
Pstas: I regularly and firmly strangle SPX every week. With TLT, I write one side or the other if it moves that way. I am presently short more puts than calls.
ICE Commentary – interesting short vids from ICE re weekly outlook for Futures and Currency trading..