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George Acs

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  • Party Like It's 2011 [View article]

    I do know that the brokerage houses appreciate the activity. 10 free trades is at least some kind of acknowledgement on their part.

    I get a weekly bouquet from my homeowner's association for staying indoors during the week.
    Sep 28 02:00 PM | 2 Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    You have been a busy guy, but that's the best way to be.

    You may be like me, in that my brokerage calls me to make certain I'm still alive if a day goes without some trading activity.
    Sep 28 11:24 AM | Likes Like |Link to Comment
  • Seeking Alpha Hedge Fund: Crowdsourcing Opportunity [View article]
    As with any attempts to crowdsource or to do any kinds of meta analyses the metrics and definitions need to be validated and standardized, respectively.

    I'm not certain that I would characterize my article ( "Almost Nothing Can Stop a Runaway Train" ), which you referenced as being "bullish" as necessarily reflecting that characterization.

    While the premise of crowdsourcing may have promise, just as there are those that analyze Tweets and StockTwits comments, the outcome of any kind of crowdsourcing analysis is only as good as the selection criteria used to input data.
    Sep 28 11:05 AM | Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    Thanks for sharing those experiences.

    One thing you may see if volatility increases is that you may find yourself electing to rollover positions that would otherwise get assigned. The reason for that is that as the volatility increases those in the money strikes will offer additional premium for being in the money, such that the spread between buying back the expiring option and selling the new one will be greater than during a low volatility period.

    That then means less pressure to come up with an alternative investment opportunity for the following week and more consistent ROI growth of a particular security, rather than 1% here and a 1% there, as is the case during low volatility markets.
    I know that I keep harping about volatility in the Daily Market Updates, but it really does change the character of how the strategy is practiced and really does make it simpler, especially if the volatility climbs the way it did this week.
    Sep 28 09:34 AM | 1 Like Like |Link to Comment
  • Party Like It's 2011 [View article]
    I didn't reference time, but it was the latter half of 2011 that really saw the volatility increase in 2011, although it did plunge in the final couple of weeks of the year as the S&P 500 climbed significantly higher.

    Your timing on stock purchases was very good.
    Sep 28 09:20 AM | Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    Sorry, but I still refer to IBM as International Business Machines, too, yet people seem to understand.

    I also assume that when you refer to ARCO, you really mean Atlantic Richfield and the Amoco that you reference? Is that Standard Oil of Indiana?
    Sep 28 09:10 AM | 1 Like Like |Link to Comment
  • Party Like It's 2011 [View article]
    Europe may have its continuing issues but now in the mix is an ECB that appears to be willing to infuse the system with support, precisely as the Federal Reserve did with Quantitative Easing.

    Since QE was widely believed to be the instrument that support US equity markets and made it the alternative investment for everyone in the world, there's little reason to suspect that a similar strategy by the ECB would help to turn things around in Europe.
    Sep 28 08:13 AM | Likes Like |Link to Comment
  • Party Like It's 2011 [View article]

    We'll see whether there's any follow through to this week's triple digit moves, although they, themselves were a follow-up to the previous week.

    We did have the same sort of rise in volatility back at the end of July, but that was as result of a nearly 5% drop in prices.

    My guess is that for most people the volatility rise over the past few days was much more kind to their bottom lines than that seen 2 months ago
    Sep 28 08:10 AM | Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    I don't really have an ideal number, but I like to see it rise in an orderly fashion. A very rapid rise is more likely associated with a large drop in stock prices. A more gradual increase is seen when you have large moves in alternating directions, such as the net market change isn't very large.

    Ultimately, while it is good to see the increase in volatility you probably don't want to see it occur at the expense of your net asset value, so the orderly increase in volatility is more likely to allow you to have a good balance between asset protection and the ability to generate more in premium income.
    Sep 28 08:06 AM | 3 Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    The only thing predictable about option premiums is the erosion of time value.

    I can't agree that premiums "typically collapse without warning." The premiums are slaves to stock price and any known events in the future, such as upcoming earnings reports. Their fluctuations, once time value is accounted for, mirrors fluctuations in share price modified by some other factors, such as volatility.

    The frequency of assignment or expiration of the contract is not really the metric by which you would assess a covered option strategy. It can only be done on the basis of comparing an identical basket of stocks that is subject to a different strategy.

    Barrons did such a study, coincidentally enough in 2011
    Sep 28 08:02 AM | 2 Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    Insofar as the comparison was made on the basis of volatility differences between then and now don't really matter too much.

    The nice thing about volatility is that it's agnostic as to what is going on. It's just a calculation, so there's not to much to be gained by trying to understand the root causes behind the markets moves that create volatility.

    In 2011 the big stories that caused the market to gyrate were related to the EU, with Greece, Spain and Italy being at the forefront.

    All that is needed right now is any single story or series of stories to cause similar gyrations. If it happens to be related to interest rates that's fine, but not necessary, although it may be sufficient.

    As far as the relative risks go, comparing 2011 to the current day, both the upside and downside risks are identical, regardless of the absolute market levels. The downside risk is always 100% and the upside potential is always unlimited.
    Sep 27 07:43 PM | 1 Like Like |Link to Comment
  • Party Like It's 2011 [View article]
    Very nice article, worth repeating the link

    If I had any say in the matter, my preference would be to see volatility increase through gyrations rather than through bona fide corrections, but no one really listens to me
    Sep 27 06:34 PM | Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    There's actually a very nice article on SA that gives a broad overview of how interest rates can impact the insurance industry

    As rates rise and insurance company portfolios turn over, their portfolio yields increase and margins expand.

    Interest rate increases are passed onto policyholders through increased credited rates and some of that margin can also used to support growth.

    When a contract has a guaranteed minimum rate and interest rates are low then the margin is low for the company. Conversely, as rates rise, providing the insurance company portfolio alternatives that can generate greater profits, the rate of rise of the interest rate paid to policy holders lags the overall increase.

    It is that growing spread that is to the benefit of the insurance company
    Sep 27 06:02 PM | 1 Like Like |Link to Comment
  • Party Like It's 2011 [View article]
    I should mention that I always wear plaid pants, a bright orange shirt and a beret, to help others locate me, as well.
    Sep 27 05:45 PM | 4 Likes Like |Link to Comment
  • Party Like It's 2011 [View article]
    Those deep in the money options are far more profitable to sell when volatility is high. If you had high certainty that the shares would maintain above the strike price the relatively small net premiums available today might be fine, but in the event of an adverse share movement those premiums do little to offer a cushion to that price drop.

    If you compare the net premium of such options today versus 2011 and especially the 2007-2009 era you could essentially print money with them 5 years ago even if your underlying stock went down significantly in value.

    That is one of the reasons that I welcome a return of volatility. It actually makes it much easier to practice a covered option strategy
    Sep 27 04:25 PM | 2 Likes Like |Link to Comment