Everyday Finance

My Options Play on Apple

TCK- With volatility at a very low level tha value just isn't there now. I could only get another 1000 or so for another decent call but would have to cap upside pretty close and just shelled out 4k for buyback. So I opted to take a little cash out due to portfolio imbalance as well.

On Wash Sale- you're totally right. Freudian slip! I'm sitting on losses elsewhere in the portfolio and the topic is on my mind but wrt a gain, no concerns then. Thanks for pointing out!

Swine Flu Stocks: Where Are They Now?

Losing 1/3 to 1/2 value in an up market
over the course of a month is a pretty bad sign.

Vaccine is shipping this week. No doubt, the swine flu hype and conversation was a net positive for many of these companies to tout their new technologies and in some cases, win some tenders for supply, but on a long term fundamentals basis, was it a game changer? Doesn't appear so and shares seem to be reflecting that in recent weeks IMO.

Swine Flu Stocks: Where Are They Now?

All,
Each company has a different stake in the swine flu play but as evidenced by the returns, they are much more highly correlated with each other and breaking news on swine flu than they are with the general market or the biotech sector for that matter.

On SVA, no, there is no "vast American conspiracy" to disparage Chinese stocks. They track pretty closely with the rest of the pack as I'm sure you'd concede.

On VLPs, the autism phenom is one of the biggest hoaxes trial lawyers have ever played on society. Not only will VLPs not cause autism, but any analytical person that doesn't treat the vaccine-autism topic like a religion knows that current vaccines simply do nit cause autism either. Study after study by independent panels of scientists have demonstrated this with massive data sets. However, what gets press in the US is Jenny McCarthy's story rather than actual evidence as conveyed by scientists.

Point? Even though VLPs (and conventional) vaccines will not cause autism, the public at large will always believe that all vaccines do. It is clearly genetic with possible environmental influences but when a kid gets a VLP vaccination in 10 years and is diagnosed with autism the next month, the parents will believe it is the vaccine.

Fleeing Investors Miss Benefits of Sucker's Rally

No; it was to force people who are sitting on the sidelines in retirement accounts with 20+ year rime horizons whether they are really doing what's best for their long term prosperity. Also to highlight the difference between a trading account and a retirement account. If you follow Everyday Finance, there are plenty of articles on investment mistakes I've made and bonehead moves I've made in my personal finances.

Why Credit Cards Are Gouging Customers - Because They Can

The credit card companies are changing the contracts.

And not because they "have to" but because they can.

High Yield Investments in a Crummy Economic Environment

Since this article went to press a few weeks ago, PMF and HYG have returned within 1% of the S&P500, so there doesn't appear to be any short squeeze in effect that I can detect.

Top Four ETFs from Last Week - LVL, TUR, IPF, ERX

Thanks for the note. I actually provide a diverse group of 4-5 of the hottest performers so I don't end up with all leveraged or all the sector on the list...somewhat random out of the top ten or so.

High Yield Investments in a Crummy Economic Environment

Thanks for your insight. I actually bought each of them months ago in the midst of the worst economic downturn we've seen in decades. Bonds were priced for depression-era scenarios and I intend on hanging on to these for the long term, as I locked in very high yields at entry. To me, NAV is inconsequential as long as the dividend payout remains steady and I'm not trading it for a quick transaction, as PMF has for years, right?

SPY Option Hedge Strategy

Hey there,
Yes, this was actually a pretty simply constructed strategy out of millions that could be imagined. I based mine on a model that assumes you hold the position to expiry and you tack on commissions at the end. It's not actually meant to be an "investment" or make money with high probability, but rather, to serve as a cheap way to insure the recent unprecedented runup in equities. If the position expires worthless because shares keep going, I could definitely still sleep at night. However, it makes good money on a wide range of S&P outcomes spanning from 7% to 24% loss, which is nice. It's important for traders using options to scale this with your overall position/portfolio for context. Like my example of losing $1000 on a $20,000 portfolio - not very palatable.

But on your suggestion to delve further into diagonals, I'd certainly love to hear more about it myself.

Thanks!

SPY Option Hedge Strategy

I like butterflies as well. This one has a much tighter range and restricted profit potential but the benefit of capped loss of your premium only if we see a complete meltdown of say, 40%. I.e. SPY must end up in a very tight range to turn a profit but perhaps with a short duration that's a great play here.

Thanks for the contribution!

Why Credit Cards Are Gouging Customers - Because They Can

It's pretty obvious isn't it?

In March, the sky was falling, right? Bailouts, printing cash, anything to stabilize the financial system.

Well, now that there's an obvious recovery "at least in shares of financials" in route to the tune of triple digit returns, do you believe AXP is "on the verge"? They need to hike fees to remain solvent? Come on.

They're doing it because now's an optimal time to generate massive gains on late fees and interest rate hikes. There are millions of Americans out of a job or losing a job soon, out of a house, out of cash, running out of their severance/unemployment coverage, etc. This is the total pinch point for millions of consumers and they pick now to hike their penalties.

So, my question to you: Did they "have to" do this as purported in their letter? Or are they exploiting the perfect storm?

There's a great documentary on I saw called "Maxed Out" if I recall where they intererviewed former credit card execs and lower management. The bottom line is that they generate the vast majority of their margin from the people at the lowest end of the economic spectrum. Right or wrong, capitalistic or exploitation, it's where their sweet spot is.

Why Everything You've Heard About Leveraged ETFs Is Wrong

This article rightly points out the "daily" distinction here. To re-emphasize, if you are in a sustained uptrend, great. You can actually exceed to "supposed by retail dummies" return - per the image above. However, all trends break eventually and due to daily rebalancing, you'll always have both long/short ends gradually approaching zero (Notice FAS and FAZ both had to do reverse splits recently?).

This image here says it all. Notice what happened to both FAS [3X long] and FAZ [3X Short] in a market where underlying Financial 1X ETF was roughly flat. They both got crushed!!!

www.darwinsfinance.com.../

If you can actually find a broker and manage/hedge your risk for that "Black Swan event", these actually make for nice pairs/shorts.....for Traders that is....

These are not suitable for a long term hold. Ever. By anyone...given the facts in both this article and aforementioned link. They are an ever-depreciating asset with time unless you miraculously catch a sustained uptrend that never breaks.

Swine Flu Stocks - Just Wait Until Fall

I'm willing to admit that this situation is so complex that I cannot predict what is going to happen. Perhaps others like yourself should admit the same. Have you read "The Black Swan"? It's a great book on why people should NOT make forecasts and predictions on things that cannot be modeled accurately. The "experts" are virtually always wrong.

I also did not state that "nothing" will happen until the fall. I stated that we will not KNOW for a few months just how bad this is.

On your returns - 40% gain in 2 weeks, 10% loss in one day...what readers here are going to be impacted by is what happens moving forward, which was the intent of the article - that they should not blindly assume continued triple digit gains in the face of the uncertainty this strain presents. However, if they want to place a speculative bet on a horrendous flu outcome and rally in shares, I listed out a low cash outlay/high return option (no pun intended).

Swine Flu Stocks - Just Wait Until Fall

Freya,
You're posting links to this mednews site with insipid stale information. A diagnostic test kit is breaking news? Do you have an affiliation with the site or something? You post links to it constantly in this thread and others.

Your comments:
"You are that "someone". Reread the title of your article."
The whole point is we won't know til fall and anyone making predictions is: wrong. It's a mathematical certainty that the vast majority of the predictions are wildly off since the predictions are wildly divergent. There's simply no way to tell how this thing's going to mutate in the coming months. It may go away. It may go away and come back in waves like the Spanish flu. Or it may wipe out millions. We just don't know. That's my point.

"Me, I'm Reporting what the Media has not published here in the USA."
Again, what are you getting at? Do you actually believe there's a massive reporter conspiracy? It's in their best interest to hype hype hype, which is what they do best. It's just that there's nothing really "new" out there to report on that's so shocking.

"Obama's injected more money."
Since when does Obama spending money correlate with actual urgent situations? Bailouts anyone? Throwing good money after bad at Chrysler/GM because a bankruptcy would bring down the country? Oh wait, they did declare and the market's up 45% from the lows!

If things are soooo bad, then why did we have the following ticker today in an UP RALLY for major indices?
BCRX down 8.5%
NVAX down 5%
SVA down 10%

These are the same stocks I mentioned in the article.

It's a roll of the dice - hence, speculative money. I wouldn't call this "investing" in fundamentals.

Swine Flu Stocks - Just Wait Until Fall

Just to address a few points,

"The estimates I've seen range up to 350 MILLION dead worldwide."
There is no scientific basis whatsoever for such an estimate. At this point, it is simply not virulent. The mortality rates are very low. What is alarming is the fact that the cases continue through the summer and the deaths are not the normal young/elderly. This is abnormal and a concern and leads to - uncertainty - in what will happen in the fall. But what scientific justification is there for such an outrageous number?

"London Companies training to operate with half current staff, the Church of England stopping Communal activities, France and the UK have already ordered vaccines for Half their respective populations"
These same activities occurred for SARS, Bird Flu, etc. and neither of those resulted in mass casualties. This is common disaster prep. Any company that doesn't have a risk mitigation plan like this post-9/11 just hasn't done their homework. The US was about to vaccinate the entire population for smallpox based on no credible threat.

By ordering vaccines for the swine flu, is that really any different than governments having available vaccines for the common seasonal flu each year? This is common.

"I have read the the Minister of Health of England expects, by the end of next month, 100,000 new cases PER DAY!"
I read this too. He made no predictions on mortality. 40% of the population ends up with a mild case of the flu over a span of 2 years, sure, there will be missed workdays and perhaps an elevated death rate from seasonal flu, but it doesn't necessarily translate into massive profits for the full swine flu index.

"Check with your Physician, you will be surprised at how much is known by the Medical Community here but was suppressed by the Media."

The words "media" and "suppressed" are oxymorons. The media cannot and will not keep a secret. They have no incentive to do so and they routinely put US national security at risk in order to break a story (remember telling the terrorists we were wiretapping them and recording their cell phone conversations?). If anything, hyping a phenomena results in eyeballs glued to the TV - Fear - ratings.
Do you use a physician who's making this claim? I don't think that is credible. With the internet and incentive to incite fear, I don't believe there is an international conspriracy amongst news outlets to act counter to their own self-interest.

Let me just close by saying the following:
I make no claims or predictions as to how virulent or contagious this strain will be in the coming years. I don't know. And given the wild range of estimates from people in no position to do so, the only certainty is that most of them will be wrong (I just hope they're wrong in a favorable direction for humanity). I just don't think we'll know until it mutates further and more time elapses. If someone is making an outrageous prediction that deviates from what the WHO, NIH, FDA, and what other relatively informed/scientifically sound institutions are making, I'd question their credibility and stake in the outcome.