Jack Haddad

Are signs of a recession abating?

I agree!

IBB is close to its target of 70/share.

I use Charles Schwab's Street Smart Pro platform. It's very good.


On Jun 03 02:37 AM Alice4321us wrote:

> Jack - Out of curiosity, what trading platform do you use?

Sold last position on USO and Bought to cover June strike 31 calls.

No problem... Glad you asked. I'm assuming you inquired about the covered call options. When i wrote June strike 31 calls at 2.85/contract, I initiated the transaction buy "selling to open" the contracts (each contract represents 100 shares). Simulataneously, I bought the shares at 32.63. So, if you take the strike of 31 and added to the premium of 2.85, you''ll get 33.85/share. Then, you take 32.63 and subtracted from 33.85 and that gives you the intrinsic time value of the calls against the underlying shares.

Explaining covered call options is beyond the scope of this post, but i hope this helped a little.

Natural gas is begining to show signs of a bottom.

Writing calls against your underlying shares not only infuses capital into your account, but also spares you from time decay. In other words, time decay is your side. It's a great form of a hedge.


On Jun 01 08:47 AM Macro_Man wrote:

> Though fundamentals are terrible, wouldnt be surprised that you are
> totally on the money here. Nat gas broke the downward channel in
> early May and looks like it came back to test the channel in late
> May. Now, if it doesn't break lower and continues higher...it could
> very well run up - just like everything else has.
>
> So far, Nat gas has lagged everyother economic indicator...not it
> may be its turn.
>
> But, the fundamentals are terrible....and I dont think I can get
> long here unless I buy 100% put protection - which is expensive

Market technicals: I project a pullback to 760 on the S&P 500

I expect the pullback to happen at the time that it is the least expected! This market is irrationally exuberant... and for now we are rallying on every bad economic indicator.

Market technicals: I project a pullback to 760 on the S&P 500

Let's see what this week brings, Alice. Sooner than later, managers who participated in this 2000 point rally must lock profits to realize gains for their clients.

Exited QID's intraday bounce trade.

Very good...point well taken.


On May 31 05:16 AM tradewind wrote:

> What Jack is saying is that the formula you are using is CAPM and
> that it gives you the theoretical return based on your portfolio's
> risk level and it does not give you alpha. To get alpha, you must
> take the difference between this theoretical return and the actual
> return of your portfolio. Do not compare it to the Benchmark return
> because this will not give the correct answer. The Benchmark return
> is already included in the CAPM formula so there is no need to use
> it again in the final calculation of alpha.
>
> For example, lets assume the T-bill return is 4%, portfolio beta
> is 1.5 and the SP500 return is 12%. Using your formula (ie CAPM),
> theoretical return= 4+(1.5)(12-4) = 16%. Now lets say your actual
> portfolio return was 20%. Alpha = 20-16 = 4%. This works for negative
> returns also. Lets say SP500 return is -10%, then theoretical return
> = 4+(1.5)(-10-4) = -17%. Lets say your actual portfolio return was
> -13%. Alpha = -13-(-17) = 4%.
>
> I hope this was helpful.

Exited QID's intraday bounce trade.

Wrong! :) But don't worry... you gave it your best shot.

Okay, as strange as it sounds, the formula doesn't work well in real life, and negative returns are still applicable in that formula. I know CAPM model got a nobel prize, but it doesn't hold true in real life... Alpha is basically the return in access of the CAPM model. If your alpha is less than predicted, it means that youre doing worse than what the suppossed CAPM return is. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha.

I hope i have expressed myself correctly. If a CAPM analysis estimates that a portfolio should earn 10% based on the risk of the portfolio but the portfolio actually earns 15%, the portfolio's alpha would be 5%. This 5% is the excess return over what was predicted in the CAPM model

Exited QID's intraday bounce trade.

You lost me completely... Not sure what you are trying to convey. Be advised that alpha is measured in many different ways, depending on your risk catagory.

Re-entered M for an intraday bounce trade.

Do you have a contact number? Email me at [e-mail]


On May 28 03:55 PM Jack Haddad wrote:

> you welcome.

Re-entered M for an intraday bounce trade.

you welcome.


On May 28 02:45 PM RiskReturnOptimizer wrote:

> Great, thanks!
>
> I'll pay special attention to the title "intra-day".

Re-entered M for an intraday bounce trade.

When intend for a trade to be "intraday trade, I don't hedge with calls...because I want to exit for a quick pop


On May 28 02:38 PM RiskReturnOptimizer wrote:

> No covered calls this time?
>
> Feels like you are turning more bullish this time?
>
> I typically see you sell some in the money calls to hedge ... or
> is June expiration too far out for you to benefit from time decay?

Market remains in trouble from a technical view point.

ETFs are great vehicles to hedge (protect or guard) your portfolio in either direction, be it long or short. I personally trade SKF, SRS, DXD, DDM, QID, and QLD. When i want to place bearish bets, DXD and QID are my favorite. For example, I bought nearly 2 blocks of QID yesterday.

In addition, these ETFs have juicy Premiums for option writers not option buyers. So, you can earn a great premium while hedging your portfolio or waiting for your shares to hit their target.

Increasd position on UNG and wrote more June strike 15 calls

No, I never buy calls. I only write calls... There is a big difference. When you buy, the decay on the premium works against you. When you write calls, it's the opposite. The decay works to add premium to your portfolio value.

How to Benefit of a Market’s Sucker’s Rally

Hi Maha,

The reversal from last Friday further confirmed that the uptrend has reversed. I don't see a catalyst for new side-line managers to bid this market higher, as old managers take realized profits for their clients.