Seeking Alpha

George Acs

View as an RSS Feed
View George Acs' Comments BY TICKER:
Latest  |  Highest rated
  • My Mad Method: Year-End Results 2012 [View article]
    Nice article, J.D.

    As far as comparisons to the S&P 500 or any other index, I would suggest the following approach, particularly since you are facile with spreadsheets.

    I trade with great frequency, specifically using covered options as my income for retirement vehicle and have written extensively on SA on the use of that strategy to capital gains, generate income and dividends, even when, as a stock picker and stock timer, I may be mediocre.

    What I do is to track the total return of each investment, which includes cumulative net premiums and dividends, to the S&P 500 for the precise period of holding. My goal is for each trade to beat the S&P 500 by 1.0% during that specific time period.

    Doing so can serve not only to validate your stock selections, but also to validate your strategy.

    I recently published an article "Increase the Surface Area of Your Portfolio and Profit" which detailed the 2012 results of about 250 closed trading positions that were sent to subscribers as Trading Alerts.

    Although not every trade is a winner, nor will every trade meet the objective it is the summary of your actions that matters and how it compares to a reasonable alternative set of actions or strategies.
    Jan 19 11:36 AM | 2 Likes Like |Link to Comment
  • Stocks Should Never Be Boring [View article]
    It certainly has been exciting and has had an options premium that would be attractive, but I haven't considered RIMM recently and considered myself lucky to have last owned it when it was at about 15 and had my shares assigned. It spared me what would have been a prolonged agony of sitting on greatly depressed shares with little appealing opportunity to create premium income.

    A few months ago I had RIMM as a possible Premiums Enhanced by Earnings play, but ultimately didn't make that trade. Shares rocketed higher in the after hours, that is until guidance was provided when shares then plummeted.

    That's why the premiums are so rich. You have to love volatility, but only when there is a reasonable likelihood of reversion to the mean.

    My concern is that the same will happen again as it is being set up as a perfect example of "buy on the rumor and sell on the news."
    Jan 19 10:19 AM | Likes Like |Link to Comment
  • Stocks Should Never Be Boring [View article]
    I tend to stay with the same stocks as much as I can. Doing so, I try to also stay in a reasonably tight price range. If shares get assigned I rotate funds into another stock while awaiting an opportunity to re-purchase the shares that were assigned.

    In general my ideal has been a monthly premium in the 2-4% range. WIth volatility so low the 4% figure is becoming increasingly difficult unless additional risk burden is taken. If you like selling covered calls, you are, most likely not someone who likes risk.

    If I do roll weeklies it starts as early as Thursday and will goes until about 3:30 PM on Fridays. The reason that I don't do it right until closing is that I have to alert subscribers and not everyone can drop everything at 3:59 PM

    The ability to rollover positions is also very strongly related to the price and ability to achieve a good premium. There are times that you just can't find that premium, such as when your stock price has fallen too far. In those cases, I wait patiently.

    This past Friday, I reluctantly rolled over YUM Brands, which offers only monthly options, as shares hovered at 65, the strike price. I wanted to be rid of shares and could have closed the option position and sold shares. YUM reports earnings 2/4 and I wasn't certain whether the 3% premium was going to be worth the risk of holding shares for an additional month.

    Sometimes there are no rules and you just go with what you believe to be the dynamics. In this case, I decided to rollover in the belief that the bad news from China, which knocked shares from about 68 to 64, will have already been discounted by traders as YUM gives guidance.

    I could be wrong, but in the interim I have the premium in hand as realized income and am able to reinvest it and generate even more income.

    As far as your statistic of being assigned 9 out of 10 positions, my ideal is to need to re-invest 20-40% of my portfolio each week. Ultimately, what matters is your performance and not how many were assigned. I compare every position's performance (including all net premiums and dividends) to the S&P 500 performance for the holding period. As long as I'm outperforming the S&P, I'm happy.
    Jan 19 10:13 AM | Likes Like |Link to Comment
  • Stocks Should Never Be Boring [View article]
    A stock not moving is what makes it so enticing for selling options. That's exactly why I like AIG. You can get about a 1% weekly ROI for selling an in the money call. If assigned you just move on. If expired you look for opportunity to sell new call options until that point that you "retire" the shares.

    And then you start all over again.
    Jan 19 08:48 AM | Likes Like |Link to Comment
  • Stocks Should Never Be Boring [View article]
    Since I tend not to think very long term, for purposes of this article and any possible trading commitment next week I only looked at possible returns down to $460 and up to $540, which would represent 8% swings from Friday's close. Based on Apple's previous earnings responses there should be a reasonable risk-reward at that level, as shown on the spreadsheet that accompanies this article.

    Usually for the earnings plays my preference is to use weekly options if they're available.
    Jan 18 08:48 PM | Likes Like |Link to Comment
  • Stocks Should Never Be Boring [View article]
    It is nice having the choice on a handful of stocks to be able to write multiple week contracts. Hopefilly7 there will be sufficient trading volume to support even more time frames and more strike levels.
    Jan 18 07:22 PM | Likes Like |Link to Comment
  • Stocks Should Never Be Boring [View article]
    The way most news is digested that should take a day or two. Given the long weekend, we should be good to go by Tuesday. I just hope that it waits long enough to still appear bargain priced.
    Jan 18 06:04 PM | Likes Like |Link to Comment
  • Stocks Should Never Be Boring [View article]
    I don't know anything about their business, at all.

    Generally when I consider making trades I'm agnostic as to fundamental and technical factors. I just look for where there may be opportunities to exploit pricing disconnects between options and /or the underlying shares.

    Being tethered to the computer and TV screens all day I do pick up things by osmosis that may be related to the actual business or issues that may impact on the business, but I look at all of that information as being akin to overheard rumors.

    One of my longtime favorites is Riverbed Technology. I have traded it and sold options and puts probably over 100 times in 5 years. I still have no real clue as to what they do, but I know that at one time HP was a rumored buyer, I know that they have some patent related lawsuits and I know that they tend to underwhelm when giving guidance. I documented its performance about 6 months ago in an SA article "Why I Turned My Back on Jim Cramer"
    Jan 18 06:03 PM | 1 Like Like |Link to Comment
  • Dividend Growth And Asset Allocation - Together At Last [View article]
    I admire your tastes in confections. I still recall that commercial. I think the guy in the background used to play Dobbs in the 60s situation comedy, F Troop.

    As far as results, it almost makes you want to be a Canadian. The 15 year projection on the XEI results in an annual compounded return of better than 11% if dividends are reinvested.

    By contrast the poor Americans get barely 5%. Double the return and Caribbean breezes year around. How can you beat that?
    Jan 15 08:33 PM | Likes Like |Link to Comment
  • Your Portfolio Is Your Presidential Cabinet [View article]
    You would think that I would have known that, being a fellow Hungarian.

    Algorithm? No, just a summary of performance of closed positions recommended to subscribers. I published that in article #97

    Seeking Alpha just eliminated the "Options" category. Understandably, the reason was that so many of the articles were extraordinarily time sensitive. In reading some of the comments in the Contributor Forum, the editors looked at covered option strategies a bit differently, as far as urgency of action and life span of information contained in the article. I would guess that some very good articles in a "Trading" category might fall into the same boat with regard to timeliness and applicability.
    Jan 12 07:17 PM | Likes Like |Link to Comment
  • Your Portfolio Is Your Presidential Cabinet [View article]
    I absolutely agree with that sentiment, except that I don't mind holding losing positions, I just hate seeing the losses get realized.
    Jan 12 07:10 PM | Likes Like |Link to Comment
  • Your Portfolio Is Your Presidential Cabinet [View article]
    The statement was in relation to the comment "nice premiums." As volatility is low, "nice premiums" are more difficult to come by unless you are more accepting of risk.

    For example, I mentioned in this article that DuPont used to be one of my favorites. I could always expect to get a 4% monthly ROI, even in months that there was a dividend. These days? Nowhere close.

    Those companies that do have nice premiums either have them because of inherent risk that's always present, or inherent risk related to an event, such as earnings.

    The statement recognized that there may be different reasons people sell covered options. It's good to know which side of the coin you are on (or in what proportions you place your priorities), as the two sides may be mutually exclusive if there is an untoward event, such as a large price decline. Although you may have received a large premium, that likely came as a result of the risk associated with the position and the likelihood of precipitous events.

    The differentiation regarding tax status is important, as the greater risk associated with those higher premiums has no tax advantage in a deferred account. Additionally, as a taxable account generally reflects discretionary funds and a tax deferred usually represents non-discretionary funds, the risk should be allocated on the discretionary side.

    Now, for the real issue at hand, I could get used to being called "Master.".
    Jan 12 07:09 PM | Likes Like |Link to Comment
  • Your Portfolio Is Your Presidential Cabinet [View article]
    Good luck.

    The way I look at it, May 2013 might represent about 3% of my remaining life expectancy, so I'd have a hard time making that kind of commitment.
    Jan 12 06:18 PM | Likes Like |Link to Comment
  • Your Portfolio Is Your Presidential Cabinet [View article]
    99 articles? By the one metric that really counts, that's not a very good ratio. I've only received 11 Pulitzers. That's barely 11%. Have to resolve to aspire to greatness in 2015 (I plan to sloth it 2013 and 2014). Also, wonder when those Pulitzer's arrive?

    I never really thought of categorizing. I prefer to think of myself as a wastrel. I know others do.

    In fact, when I did that little exercise a week or so ago looking at the performance of about 250 closed positions recommended to subscribers, I was actually surprised at the average holding length being as high as it was at 23 days. Of course, if I did the statistically correct thing and removed the outliers, which happened to also be the sole losing positions of the year (sold to tax tax losses, my patience can only take so much), it would have been quite a bit less. But then, I don't get paid to do the statistically appropriate thing. But I suppose by that metric I would be a trader.

    But, no. I'm not a trader. I'm pretty passive. I buy shares and sell calls. I let the market dynamics determine whether the shares ultimately get traded away. Too much pressure having to be on both ends of the decision process.
    Jan 12 06:16 PM | Likes Like |Link to Comment
  • Your Portfolio Is Your Presidential Cabinet [View article]
    The real pressure, after a brief uptick earlier this week, which itself followed a week of losses, was the comment that cash flow may be insufficient. Without cash flow there is no transformation. WHile Amazon and Costco may be able to pay essentially no interest on notes, that's not the case for JCP. They need to be able to fund as much of their transformation as possible (and as quickly as possible).

    I do have shares and up until about 3 weeks ago was feeling pretty good about losing them to assignment at $22. Now I'm just hoping to be out of the position by earnings.
    Jan 12 04:29 PM | Likes Like |Link to Comment