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Martin Vlcek

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  • Russia, Gold, Oil, And Interest Rate Extremes [View article]
    A combination of buying ATM puts and writing ATM calls is equivalent to shorting the underlying stock. So that's another possibility, to combine buying puts and selling calls, and perhaps buying also a black swan protection by purchasing a far OTM call option so that your written call position doesn't blow up.
    Dec 19, 2014. 08:58 PM | 2 Likes Like |Link to Comment
  • GoPro's CEO Is Stoked... But Selling [View article]
    in hindsight, I could have done best with a directional trade, just buy January ATM puts. They "cost" ~$10, and would have made me 300% profit by now. But apparently, my conviction was not that high in terms of the magnitude of the move. It was somewhere in between. The spread I have is doing better now as the stock really fell below my lower strike. I decided to keep it and will hold until most time value is extracted.
    Dec 19, 2014. 05:43 PM | 1 Like Like |Link to Comment
  • Today: Top Of The VIX? Bottom For SVXY? [View article]
    I watched that relentless spike to ~$65. It was amazing. Almost no pause. I knew that was panic buying and would not end well. But I held on to my positions. It was the most unnerving day of this year for me, watching me lose the gains all the way from $65 to below 60. I am still holding tight, curious if we see some more SVXY gains. They seem to be waning despite SPY's huge rally today. The VIX futures vs. VIX spot vs. the volatility of VIX (VVIX index) were acting really funny and crazy last couple of trading days. Never seen such confusing signals in the past to years at least.
    Dec 18, 2014. 08:21 PM | 1 Like Like |Link to Comment
  • Today: Top Of The VIX? Bottom For SVXY? [View article]
    And the first 9% of the return is always the safest return with the best risk/reward.

    I came to the same conclusion as Peter using my own analysis so I wasn't late to the party, and added greatly to my SVXY positions at around $61 and $58 before the Fed announcement.

    Peter, thanks for another excellent article. I usually don't post many replies in the discussion but that doesn't mean I don't enjoy your excellent analysis every time I read your article.

    After all, it seems we might get a Santa rally, although the easiest and safest gains have been made already.
    Dec 18, 2014. 08:13 PM | Likes Like |Link to Comment
  • Recent Hindenburg Omens Signaled Caution, Now What? [View article]

    Thanks for an excellent analysis. I think volatility will be the name of the game in 2015. Perhaps the markets will rise 10% in 2015, but I am almost 100% sure it will be a very bumpy ride with many up and down swings, whipsawing many investors who didn't "buckle up". I believe 20 to 30% annual gains without leverage or excessive risk-taking will be possible in 2015 thanks to this volatility for a skilled swing trader. But this is just the most probable scenario I see. The markets always manage to surprise almost everyone and manage to make almost all predictions wrong or badly timed:).
    Dec 18, 2014. 07:21 PM | 1 Like Like |Link to Comment
  • Russia, Gold, Oil, And Interest Rate Extremes [View article]

    Thanks for another great article. What expirations (how many weeks/months out) and strikes (how much ITM, OTM, ATM?) do you typically use? How wide the option spreads, if you use them. Or do you use just plain naked shorting? That's too dangerous for my taste, so I usually use various option spreads.

    The options on the leveraged ETFs seem pricey though, especially for longer expirations, and the put options chain is usually very "flat" = it discourages/disadvantages shorting.
    Dec 18, 2014. 06:58 PM | 1 Like Like |Link to Comment
  • Russia, Gold, Oil, And Interest Rate Extremes [View article]

    I admire you for the strength to be 100% in Treasuries. Even if I thought treasuries were the best investment (they are a very good investment indeed), I would usually invest at least a little in stocks and other asset classes. I often see good opportunities. It is great fun, but also good for smart diversification. Being 100% in anything is too risky for me, although I have a very concentrated portfolio.
    Dec 18, 2014. 05:55 PM | Likes Like |Link to Comment
  • Russia, Gold, Oil, And Interest Rate Extremes [View article]

    I've had similarly spectacular returns for the past the past two years (~60% CAGR),mainly using lots of ETF swing trading, mainly SVXY and TLT, FXE and such besides some individual stocks. It is great fun and adds nicely to the bottom line.

    However, you have to be careful. Extrapolating these returns over a full cycle is not prudent. When the tide turns...

    I've been much more careful in 2014 and it paid off so far. The "sandbox" mode guaranteed by the Fed for the past five years is over. The sharks have been let out of the cages:). I can sense it in the volatility of volatility itself and other indicators.
    Dec 18, 2014. 05:48 PM | Likes Like |Link to Comment
  • GoPro's CEO Is Stoked... But Selling [View article]

    Good thinking. I decided against that as it would limit my upside (stock downside) too much as I was "sure" the stock would crash hard, not just a little. Also, I would have to open a wide call spread (perhaps $40 wide) in order to limit the premium I would pay on the protective higher strike call that I would buy against the ATM call I would sell. ( I never sell a totally naked call). A narrow call spread would limit my gains in terms of the difference between the premium sold vs. bought = the same problem of a flat IV curve as in case of buying puts. Call spread is the same thing as a put spread, basically. A wide spread would limit my ROI as the money at risk would be too high.

    But with the stock now below my lower put strike ($75), I am effectively selling calls now by keeping my put spread still open. So we will see if the gains are better now.
    Dec 16, 2014. 06:44 PM | 1 Like Like |Link to Comment
  • No 'Dollar' Resolution [View article]
    Excellent analysis. Thanks.
    Dec 16, 2014. 05:55 PM | 1 Like Like |Link to Comment
  • GoPro's CEO Is Stoked... But Selling [View article]
    A couple of thoughts on this GPRO short. I "called" a short at $95 internally for my portfolio (I didn't write an article as GPRO is crowded with similar articles). So in theory, GPRO was a great short. However, to be profitable the stock borrow cost must be decent, or option premiums must be reasonable enough to make the trade profitable. This was not the case for GPRO.

    For me, shorting of GPRO was sort of a trap and IMO will continue to be. I knew it would be so from the look of the options curves and bid ask spreads but I still did a small trade anyway because the probability of the fall was huge in my view. But the put option premiums were shy-high, probably still are (the IV curve is extremely flat in terms of different strike prices for longer maturities), and the IV dropped as the stock continued to drop.

    So while I correctly "called the top" and shorted the stock from $95 until $75 (~20% gain) via a short put spread, I only made about 10% gain on the trade through options in two months due to terrible options decay on the longer-term put option. Also, GPRO options are terribly illiquid, have huge bid ask spreads and you can't get a decent fill. For most stocks, even if bid ask spreads are very wide, you can get a decent fill not far from the midpoint. This is not the case with GPRO. So rolling GPRO options or even trying to enter/exit the trade will cost you a high percentage of the potential profits.

    But it was fun to "call the top" in GPRO and do a tiny trade.

    Also, performing trades through options instead of plain stock buying/selling is THE safest way to invest, if you know how. Options are like fire. A great helper if you know how to use it and know how to stay safe.
    Dec 16, 2014. 05:29 PM | 3 Likes Like |Link to Comment
  • Oil & Gas Stocks: Pain, Then More Pain... When Is The Gain? [View article]
    I think the number of likes for Trade in Mexico (buy oil now = 71 likes) versus Perplexedtex (sell oil now = 10 likes) tells us the bottom is not in. The consensus is too bullish IMO. I think another capitulation selling (similar to the one after SDRL dividend cut) is needed for a longer-term bottom to form.

    I own only ~25% of my planned full long oil theme position. I will add some more when/if the oil tests $50 per barrel. Russian ruble losing over 10% in one day is not normal. The situation clearly is not stabilized yet. It could be a major negative surprise in the coming months.
    Dec 15, 2014. 04:56 PM | 4 Likes Like |Link to Comment
  • The Real Reason Saudis Didn't Cut Oil Production [View article]
    Saudi Arabia apparently determined to defend its market share with further price cuts to both Asian and U.S. customers for December:
    Dec 6, 2014. 12:44 AM | 1 Like Like |Link to Comment
  • The Real Reason Saudis Didn't Cut Oil Production [View article]
    "Those sources don't produce enough energy, cause as many environmental problems as Oil, and are being discarded by most European countries as failures"

    as I mentioned in the comments, as an investor, I am indifferent to whether carbon energy or alternative energies or nuclear prevails and don't want to get ideological.

    But as an investment implication, in the long run, alternative energies put a lid on oil prices even if they can't produce enough energy to cover the entire demand. They will serve as marginal producers, similar to the U.S. shale oil. The shale doesn't produce enough to cover the entire demand but still has profound impact on the price of oil.

    The alternative energies in Europe are a "failure" in Europe mostly just because of the costs (that they need to be subsidized). And that was the point of the article: Lower oil makes the subsidy equation even worse and kills alternative energy development. Higher oil would make the alternative viable with lower or no subsidies. Alternative energy doesn't have to cover the entire demand. It is just one of the sources. It is not one or the other.
    Dec 3, 2014. 11:38 PM | Likes Like |Link to Comment
  • Trends And Developments: Checking Under The Hood Of A Powerful Bull Market [View instapost]
    Thanks for all the comments. I added some physical gold (tiny 20 grams added lol). The delivery time is 21 days again since my order, there seems to be strong demand for physical. I also own some paper gold play through GDX.

    Anyway, let's hope the GPRO rewards us with better returns. I don't use technical for trading, but I can't help but see a big narrowing triangle forming, so the price could shoot up or down soon.
    Dec 3, 2014. 09:26 AM | Likes Like |Link to Comment