4 Long And Short Trades You Can Make Monday Morning [View article]
Hi SanDiego (great town btw, which I think I said once before or to another with a similar username)
No, IF I owed shares of RIMM the opposite would be true, I would want to sell calls into this move higher which has resistance above. We don't know if it will rocket higher in two days or drop like a rock. All we can do is play the hand we have in front of us as best we can.
For ME and ONLY me I would sell calls here and above $15 absent material news. or I would sell the shares. I would (am actually) waiting for a pullback and I will write covered calls as per my article.
Somewhere someone (I am not going to name names) asked Rocco about waiting for RIMM to fall before selling calls. It's not what my article stated, but I think in an attempt to be responsive Rocco tried to answer the question anyway despite the question error.
4 Long And Short Trades You Can Make Monday Morning [View article]
This is a good question and there can be several answers, but my motivation is only one. I need to add that the concept of selling the covered calls is taken out of an article and not simply a statement "do this or don't do that" http://seekingalpha.co...
The short answer for me in considering the pullback is based on technical reasons. The recent climb in price breaking through weak resistance has not been confirmed and the price is just below the 60 and 90 day moving averages (more resistance). I believe the overall market is vulnerable to a pullback after the large run up in prices and the end of the quarter. Also it is simply a lower risk trade if entered in from a lower price. Chasing stocks is not an optimal strategy for me so I often look for pullbacks before entering.
Lastly, it's not just selling calls, its selling covered calls.
4 Long And Short Trades You Can Make Monday Morning [View article]
Rocco, I know this is your article so I hope it's ok if I post a comment in reply. I do not intend to turn this into a free for all so I will leave quickly.
Morgan by your own words you counterdict yourself. On one hand you suggest selling $15 covered calls is awful (because of "plenty of downside and no yield" offering premium of $.34/$.64) and yet suggest selling put options with the same strike price of $15
Do you have any idea how big of a novice you make yourself appear to be? perhaps a google search on "call put parity" would be on order before you make another comment. In short the relationship between calls and puts are largely STATIC so selling a covered call IS largely the SAME as selling a put. another term is "synthetic" and a short put is a synthetic covered call and vis versa.
To top things off, all else being equal it is almost always better to sell a covered call with a stock price like RIMM compared to a put. The risk is the same and the premium is greater (because of greater profit potential) with a call than a put. Liquidity is usually better with calls resulting in less slippage.
You have a lot to learn about options, so instead of "going nuts" maybe go to the finance section of the book store.
Research In Motion May Be Attractive With The Right Approach [View article]
Why bother at all?? - simple, there is an edge and as long as the edge (real or perceived) is greater than any other edge relative to portfolio balancing it's worth doing. $RIMM $AAPL $T $NOK $GOOG
Research In Motion May Be Attractive With The Right Approach [View article]
I would agree that one day of trading, especially today doesn't mean a lot for longer term investors. There does appear to be relatively limited downside in real dollar terms though. Problems are priced in and if they hit the ball hard with 10 or something else it will add a lot of wind in the sails
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
Just a quick update $VXX - I am still short some OTM puts and OTM covered calls. I closed out one position with $17 April puts for a gain near the peak yday. Almost re-bought into the close but didn't reach my entry target. IV has understandably moved higher in the last four trading sessions. Will look for IV to fall and Theta to burn off the premium
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
$VXX $TVIX
Hey Tom,
What I am saying is the options largely price effects such as roll over costs and other costs/risks so a "better" play is often covered calls, spreads, and outright positions with volatility compared to the ETN itself. The VXX is priced based on right here and now with a blend of short term (think day traders) and longer term trading pressure. On the other hand the options are going to likely have at any given time more influence from a longer term perspective (in theory of course) which means they should overall be "better priced" for those looking at the VXX as an investment instead of a trading vehicle (again relatively speaking). VXX is likely due to the fallout from TVIX in part
http://bit.ly/GV5HGj is where you can find the best information about the VXX and on the right hand side you will see PDFs with the prospectus and fact sheets. Anything else will be second hand so you might as well get it from the source.
Book Review: How Markets Really Work: A Quantitative Guide To Stock Market Behavior [View article]
Thanks for the kind words.
I couldn't agree more that fading does require a lot of effort into knowing the sweet spot in "stepping on the train tracks". also lost on many the fact leverage is a killer for most who try to fade stocks.
Yes, you can expect to see more upcoming articles about fading, but I will likely have as many or more on my site paid2trade.com as many don't enjoy reading about the stock they just bought out of excitement receiving less than wonderful reviews....LOL
I thought the RSI setups in the book are especially interesting. I don't currently give a lot of weight to the RSIs on different time frames but will be running some back testing to see what the results are.
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
"Maybe", sorry but that is the best anyone can answer this. Remember the VXX is not based on the VIX but rather VIX futures which are correlated and not fully correlated. The bigger question is if the futures will move up relatively as much.
All else being equal I would say if the VIX moves above by at least a point the odds are in your favor. In order to mitigate expenses (as well as other reasons) you may want to consider selling volatility instead of a straight exposure position.
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
Why the $VXX is at any given price is always going to be subjective, but in part it's a safe bet to price part of the drop and part of the price at any given time with a discount due to credit default risk.
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
One would certainlythink so one its face, but there ate several factorsimpacting the price. The first item to take note of is these products use futures to track the VIX. so right off the bat you're not tracking the VIX, but rather futures. next you have management fees, slippage and inefficiency of size. The very best one can expect is a close correlation intraday. Beyond one day it becomes increasingly fuzzy. It is my understanding that one of the few sure things on wall street is to short leveraged ETFs ETNs and simply hold the position. There are obstacles for the average retained trader from doing it, but you can guess what your broker is doing with your shares....
If trading these products for longer than a day or two u would look to using options as they level the playing field somewhat by pricing in the differences. With TVIX options are not a choice but you can with VXX as I have
4 Long And Short Trades You Can Make Monday Morning [View article]
No, IF I owed shares of RIMM the opposite would be true, I would want to sell calls into this move higher which has resistance above. We don't know if it will rocket higher in two days or drop like a rock. All we can do is play the hand we have in front of us as best we can.
For ME and ONLY me I would sell calls here and above $15 absent material news. or I would sell the shares. I would (am actually) waiting for a pullback and I will write covered calls as per my article.
Somewhere someone (I am not going to name names) asked Rocco about waiting for RIMM to fall before selling calls. It's not what my article stated, but I think in an attempt to be responsive Rocco tried to answer the question anyway despite the question error.
Best
Robert
4 Long And Short Trades You Can Make Monday Morning [View article]
The short answer for me in considering the pullback is based on technical reasons. The recent climb in price breaking through weak resistance has not been confirmed and the price is just below the 60 and 90 day moving averages (more resistance). I believe the overall market is vulnerable to a pullback after the large run up in prices and the end of the quarter. Also it is simply a lower risk trade if entered in from a lower price. Chasing stocks is not an optimal strategy for me so I often look for pullbacks before entering.
Lastly, it's not just selling calls, its selling covered calls.
4 Long And Short Trades You Can Make Monday Morning [View article]
Morgan by your own words you counterdict yourself. On one hand you suggest selling $15 covered calls is awful (because of "plenty of downside and no yield" offering premium of $.34/$.64) and yet suggest selling put options with the same strike price of $15
Do you have any idea how big of a novice you make yourself appear to be? perhaps a google search on "call put parity" would be on order before you make another comment. In short the relationship between calls and puts are largely STATIC so selling a covered call IS largely the SAME as selling a put. another term is "synthetic" and a short put is a synthetic covered call and vis versa.
To top things off, all else being equal it is almost always better to sell a covered call with a stock price like RIMM compared to a put. The risk is the same and the premium is greater (because of greater profit potential) with a call than a put. Liquidity is usually better with calls resulting in less slippage.
You have a lot to learn about options, so instead of "going nuts" maybe go to the finance section of the book store.
Research In Motion May Be Attractive With The Right Approach [View article]
Research In Motion May Be Attractive With The Right Approach [View article]
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
Hey Tom,
What I am saying is the options largely price effects such as roll over costs and other costs/risks so a "better" play is often covered calls, spreads, and outright positions with volatility compared to the ETN itself. The VXX is priced based on right here and now with a blend of short term (think day traders) and longer term trading pressure. On the other hand the options are going to likely have at any given time more influence from a longer term perspective (in theory of course) which means they should overall be "better priced" for those looking at the VXX as an investment instead of a trading vehicle (again relatively speaking). VXX is likely due to the fallout from TVIX in part
http://bit.ly/GV5HGj is where you can find the best information about the VXX and on the right hand side you will see PDFs with the prospectus and fact sheets. Anything else will be second hand so you might as well get it from the source.
Book Review: How Markets Really Work: A Quantitative Guide To Stock Market Behavior [View article]
I couldn't agree more that fading does require a lot of effort into knowing the sweet spot in "stepping on the train tracks". also lost on many the fact leverage is a killer for most who try to fade stocks.
Yes, you can expect to see more upcoming articles about fading, but I will likely have as many or more on my site paid2trade.com as many don't enjoy reading about the stock they just bought out of excitement receiving less than wonderful reviews....LOL
I thought the RSI setups in the book are especially interesting. I don't currently give a lot of weight to the RSIs on different time frames but will be running some back testing to see what the results are.
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
All else being equal I would say if the VIX moves above by at least a point the odds are in your favor. In order to mitigate expenses (as well as other reasons) you may want to consider selling volatility instead of a straight exposure position.
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
TVIX ETN Sell-Off Explained [View article]
$USO is a great example that it happens to all the time.
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
yes, even the product makers of the ETNs say the exact thing in their disclaimer (somewhere around page P26-30 if I remember correctly)
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
Fear Of 'Fear Index' Tracking ETNs May Provide Opportunity [View article]
If trading these products for longer than a day or two u would look to using options as they level the playing field somewhat by pricing in the differences. With TVIX options are not a choice but you can with VXX as I have
TVIX ETN Sell-Off Explained [View article]
Keep up the good work
Robert