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Richard Glenn

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  • High Beta Value Isn't Working Right Now  [View instapost]
    I really appreciate your willingness to share things that are not working. Can you really stomach a 69% drawdown? That would feel awfully close to a total wipe out to me. I think limiting max drawdown is one key to a system that you can stick with over time. The longer I invest, the more conservative I get, I guess. Thanks again.
    Oct 29 03:12 PM | Likes Like |Link to Comment
  • Backtesting A Portfolio Of Low Beta, High Quality Dividend Payers [View article]
    Great article Tom. You mention in the comments testing a buy write strategy. I was wondering where you get historical option prices to back test that with. I have been looking for a source of historical pricing data on options without much luck. Any help would be appreciated. Thanks.
    Oct 21 12:12 AM | 1 Like Like |Link to Comment
  • Are We Diving Into A World Slump? [View article]
    What the central banks are aiming for is inflation, not liquidity. And inflation is a great balm when the problem is too much debt. And for all the carping about QE (to infinity and beyond!), what would you have the central bank do? Follow Mellon's advice to "Liquidate, liquidate!" regardless of the social and political costs? Ben is doing the only thing he can, and if inflation doesn't get too out of control (a big if, I know) he will come out of this looking like a hero. Risk inflation in the future or accept a depression right now -- I'll roll the dice on inflation, thanks.
    Sep 25 12:40 PM | 1 Like Like |Link to Comment
  • How We Made 613% With Apple Options In 7 Weeks And Expect To Do It Again In 4 Months [View article]
    Just wanted to point out that if fully invested this is a VERY risky strategy. Take a very hard look at the P/L graph above. A substantial move up or down (which apple makes a couple times a year, on average) exposes this strategy to an almost complete wipe out. Any strategy that suffers regular 80%+ losses is going end in tears, even if it has great returns the other nine times out of ten.
    Options are an amazing tool for investors, but they are much more complex than plain vanilla stocks, and anyone promising huge, low risk returns trading them is just plain dangerous to your wealth. Like Klobbasa, I would also like to hear the outcome of the SEC fraud complaint against the author.
    Sep 16 11:20 PM | 1 Like Like |Link to Comment
  • Why Google Is About To Break Out To All Time Highs And A Modified Butterfly To Play It [View article]
    Thanks for the comments. re_train: I don't sell any puts here, but if I did then I would calculate my return based on the total amount of the strike (cash secured). As for my return estimates on this position, there are several online option calculators that will give you an option price if you put in strike, time to expiration etc. My estimate of a double was a rule of thumb from trading options daily for almost 10 years. Depending on how much time decay has helped you out it could be more or less, but it will almost always be a very nice (50%+) return if the stock moves through your strike zone.
    Sep 16 10:54 PM | Likes Like |Link to Comment
  • S&P 500 Earnings Poised To Plummet [View article]
    Nice article, r squared of .91 is impressive. Do you make any allowances for write offs in the "E" when you are calculating? For example, in 2009 I think the plunge in E was largely due to several huge asset write offs, rather than a deterioration of cash coming through the door at the average company (although there was a slowdown there as well).
    Sep 12 12:06 AM | 1 Like Like |Link to Comment
  • The Burning Village: A Fable [View instapost]
    Fantastic. You have to laugh so you don't cry, I suppose.
    Sep 5 10:57 PM | 1 Like Like |Link to Comment
  • Give In To Peer Pressure, Buy American International Group [View article]
    Tom I really value your opinion. Are there any specific issues at AIG that you think are not reflected in the numbers? (other than Timmy's involvement, of course). By the numbers there seems to be a compelling long case. The Gov'ment ownership seems like a net plus to me, as they are "dumb" money desperate to sell shares and get out -- shares the company can buy back on the cheap. Your thoughts would be appreciated. Thanks.
    Aug 27 10:22 AM | Likes Like |Link to Comment
  • Calling Nokia: A Case For Using Options [View article]
    Indeed. The 14' 2$ calls are now trading at $1.23 ish with the stock at $2.64. That's an almost 100% gain on the options Vs. an almost 50% gain if you bought the shares. Gotta love cheap leverage. And on a side note, if you are holding these calls you might want to lock in some profits. NOK is far from out of the woods, and this recent pop is just the sort of selling opportunity you have to grab with a position as speculative as this one, imho. Good luck.
    Aug 8 02:34 PM | Likes Like |Link to Comment
  • Winning In A World Without Yield: A Portfolio Level Solution [View article]
    Great food for thought. How do you get comfortable with the reporting in emerging markets? (in order to buy the equities) The chances for fraud seem so much greater. Thanks.
    Jul 31 01:27 PM | Likes Like |Link to Comment
  • Almost-Free Leverage On Intel [View article]
    Slim Shady is absolutely right. You can't ignore the dividends -- that's why the ITM calls are so cheap compared to the same strike puts. The real cost of this leverage is more like 9% as Slim points out. And 9% in this rate environment is far from "free".
    Also Skyler, I have to correct you on "you give up the dividend in any options trading situation except covered call writing" That's just not accurate, as the put prices have future dividends baked in so that if you sell them you get compensated for the dividends that occur before expiration. There is no free lunch.
    Jul 18 12:23 PM | 2 Likes Like |Link to Comment
  • How Penn State Could Put Jamie Dimon In Jail [View instapost]
    Amen to that. No more fines. Those just become a cost of doing (dirty) business.
    Jul 13 04:04 PM | Likes Like |Link to Comment
  • Calling Nokia: A Case For Using Options [View article]
    Crozz: You are right to note that implied volatility on the options is sky high at 80+%. But you have to remember that "normal" ballparks for what would be considered "high" IV just don't apply in some special situations (small cap drug stocks pending FDA approval etc.) and NOK at $1.86 is one of them. Option pricing models have a hard time dealing with the possibility of sudden radical price change rather than small steps. Even at an 80% IV, I think the options are too cheap given the range of possible outcomes in the near future.
    Try this as a thought experiment: buy the stock and sell the $2 calls for .65. Your net investment is $1.31 and you cap your upside at .69 for a max total return of 53%. Given the very real possibility of losing everything, I would say a 53% max upside is way too small for the risk involved. This shows just how cheap the $2 calls are, and why you might want to be a buyer rather than a seller.
    Jul 11 05:34 PM | 1 Like Like |Link to Comment
  • Calling Nokia: A Case For Using Options [View article]
    You are absolutely right that the common stock is basically an option on the survival of the company. The calls, however, give you even more leverage at the cost of having a time window for being correct. Given the situation Nokia is in, I think getting 3 x the leverage ( .65 vs $1.86) in exchange for an eighteen month window is a worthwhile trade off. Put another way, you can risk 1/3 of the money for almost the same reward if you are right and Nokia bounces back.
    Jul 11 04:27 PM | Likes Like |Link to Comment
  • JPMorgan: Estimating Q2 Numbers And The Whale Trades Impact, Part 1 [View article]
    Nice analysis. It's always good to hear from someone who has actually traded these products, as opposed to pundits who just finished talking to someone who knows someone who has the inside scoop.
    Jul 10 04:08 PM | 1 Like Like |Link to Comment