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George Acs  

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  • What A Surprise [View article]
    I think some of your numismatic returns may turn out to be everyone's envy in 2014.

    PMs usually are the winners, aren't they? It reminds me a little of European waiters who get tipped regardless of the quality of service. There is something to be said for incentive plans. Say what you will about hedge fund managers, but there's something good about being aligned with the interest of your clients. and not just collecting a fee.

    There was actually an old Groucho Marx line something like "Join the Army and see the Navy." You don't always get what you signed up for with your PM
    Jan 29, 2014. 03:49 PM | 1 Like Like |Link to Comment
  • What A Surprise [View article]
    There is an explanatory and illustrative article at

    Essentially, it is a trade that looks for a threshold ROI that utilizes a strike price that is outside of the range being predicted by the option market.

    However, the caveats are that you must be willing to own the shares at that price if faced with assignment or be willing/able to manage the options, such as rolling the put contracts over if it appears that assignment is going to occur, if not wanting to take ownership of shares.

    As I mentioned in the accompanying article to this one ( ) I'm currently inclined to consider earnings related trades after earnings are announced, particularly looking at the sale of puts following a large earnings related price drop
    Jan 28, 2014. 12:39 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    This article is specifically about selling options a few days around earnings. We all need luck trading, but no more so when following any particular strategy that has some basis of support.

    I suppose being short momentum stocks or on the basis of valuation NEEDS ITS OWN KIND of LUCK
    Jan 28, 2014. 08:33 AM | 1 Like Like |Link to Comment
  • Earnings Finally Matter [View article]
    The utility of listing the ROIs in the worksheet you referenced is for comparative purposes, as you can see the ROIs are based upon weekly, monthly and some expanded weekly options.
    But for those that follow the longitudinal application of the strategy it allows an historical outlook on how ROI, particularly the premium based portion, has been decreasing as market volatility has been decreasing.
    Jan 26, 2014. 09:56 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]

    That's exactly the way: option premium divided by strike price, in the case of a put sale.

    I stay away from discussing annualized returns, particularly as they may be derived from very short term trades. Just too much tendency for overstating reality.

    The only time I do discussed annualized returns are in cases when I look at case studies of specific stocks that were bought and subsequently assigned on multiple occasions over the course of a defined period of time. An example of that is shown here on a chart appearing in a recent article published in TheStreet
    Jan 26, 2014. 09:53 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    Thanks. Now if only I could get my wife to appreciate my genius and better yet, to pay for it.
    Jan 26, 2014. 08:05 PM | 1 Like Like |Link to Comment
  • Earnings Finally Matter [View article]
    There is little that isn't risky regardless of market tone. The risk in the suggested trades mentioned here is tempered by the strike level chosen.

    What surprised me, however, before running the numbers, was how few of these stocks this week met my criteria. I had been expecting most of them to do so.

    To me, that suggests that the options market is under-estimating the Potential market impact on top of earnings related risk. That is one of the reasons I am more inclined to considered entering trades after earnings are announced, rather than before.
    Jan 26, 2014. 08:04 PM | 1 Like Like |Link to Comment
  • Earnings Finally Matter [View article]
    Thank you. No, I keep things as simple as I can. I think that if I were about 10 years younger and still had some capacity to think in more than a single plane I would likely consider using other more complex strategies, as long as they don't look like anything that flies
    Jan 26, 2014. 07:09 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    The market has essentially decoupled itself from earnings over the past few years as it has followed one macroeconomic issue after another and has been nearly schizophrenic in its interpretation of world and economic events.

    The quality of earnings is relatively addressed. As you say, cost cutting has been a substantive component, but real emphasis on "top line" and "bottom line" has been missing.

    Now share buy backs are increasingly becoming the artificial means whereby earnings are enhanced

    While there may be some merit to your suggestion that earnings decoupled from revenue growth is an ongoing risk factor, you can't ignore the positive impact of Quantitative Easing on stock prices, nor can you ignore the temporal coincidence of the market suddenly slowing down just as QE did so, as well.
    Jan 26, 2014. 03:31 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    I'm glad that most people don't realize that by that you mean that you are being forced to do the reading.
    Jan 26, 2014. 03:25 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    Thank you. I may have to find out who this other guy is, but I may prefer to just seethe in a cesspool of jealousy
    Jan 26, 2014. 03:24 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    Thanks, but a little surprised that you couldn't work a ballroom dancing reference into the mix.
    Jan 26, 2014. 03:21 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    For starters, anyone thinking about a covered option needs to realize that a straight higher moving market is essentially the only way to under-perform, especially if using longer term options. Not only does low volatility keep longer term premiums low, but if the market is going straight higher the longer you are tied down the more it moves without you.

    Additionally, if you share the bullish sentiment, then you can express it by not covering your entire position.

    I try to stagger my expiration dates as much as possible, with both macro and micro-economic factors in mind.

    However, in a downward moving market your premiums will increase along with volatility. Assuming that your stock selection is no better or worse than the average person, the premiums you receive will act as a cushion and enhance your returns relative to the index. I'm much more likely to stick with a loser rather than to get out and try again. My thinking is that if I was stupid enough to buy the first loser, what makes me believe that I'm now suddenly smart enough to turn around a buy a winner? You could just as easily take the money and sink it into a new loser, while you watch your previous stock do what stocks so often do and begin their reversion toward the mean.

    I much prefer markets that are either stagnant or move up and down with a net bias higher.
    Jan 26, 2014. 03:20 PM | Likes Like |Link to Comment
  • Earnings Finally Matter [View article]
    I had a friend in dental school (we had a class size of just 17) who would always ask his questions in multiple choice format.

    The question started with the actual question and then he gave four possible and logical answers and then proceeded to give his opinion on which was the correct answer.

    We would all sit and time the process.

    The instructor would simply say "yes, it was the last one."
    Jan 26, 2014. 03:10 PM | 3 Likes Like |Link to Comment
  • What A Surprise [View article]
    I agree that it is nice seeing that happen, but that is what they have been so good at doing for quite a while. CAT reports earnings before Monday's opening and I'm hoping that it falls some more, but not on Chinese news, rather on company specific news and then I would be a very interested buyer again.

    Don't know if you saw the article that was linked to in this one that specifically focused on earnings. It does discuss the possibility of selling puts after earnings if the initial response is to plunge lower.

    Jan 26, 2014. 03:08 PM | Likes Like |Link to Comment