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  • Make 70% A Year With Math [View article]
    10% per annum is definitely good - the problem is that once in few years, the +10% turns into -40-50%, and erases all previous year gains. If you compound (which is the whole purpose of investing), five 10% years followed by one 50% year don't bring you back to zero - you are now negative. And to recover from 50% loss, you need a 100% gain.
    Jun 2 10:52 AM | 1 Like Like |Link to Comment
  • Calm Before The Storm [View article]
    Going long volatility at the RIGHT TIME is one of the best strategies. Look at VIX chart - it NEVER stayed below 12 for more than few weeks. I had 100% success going long VIX each time it dips below 12. Look at our performance page and search for "VIX calendar".
    Jun 2 10:23 AM | Likes Like |Link to Comment
  • Calm Before The Storm [View article]
    You are missing the point. VXX goes down over time even if VIX stays on the same level - this is how it's designed, due to the roll effect.
    May 31 10:55 AM | 1 Like Like |Link to Comment
  • Calm Before The Storm [View article]
    Correct, I don't. But I'm playing probabilities. There is a HIGH probability that VIX won't stay below 12 for more than few weeks, based on historical data. Is it certain? No.

    Shorting UVXY is also high probability play, but it's definitely not risk free. Try to do it in 2008 and your account is toast.
    May 31 02:47 AM | 2 Likes Like |Link to Comment
  • Calm Before The Storm [View article]
    Absolutely true. VXX and SVXY are for short term traders. VXX is probably the worst "investment" you could find among all asset classes.

    But if you look at VIX chart, you can also see that VIX NEVER stayed below 12 for more than few weeks, which gives an excellent entry point to any long volatility strategy.
    May 30 06:52 PM | 2 Likes Like |Link to Comment
  • Calm Before The Storm [View article]
    I think it's an excellent article. Those who post negative comments simply show their ignorance. You can trade VIX and VIX related products very profitably if you know what you are doing.

    We played VIX 7 times in 2013 using options for 24%, 35%, 48%, 30%, 32%, 25% and 46% gain. Entered another trade few days ago.

    BBwetrust, you cannot trade VIX directly, but you can trade VIX options and futures. There are a lot of strategies that can be traded.

    btw, in order to profit from VIX, you don't need a major correction. 1-2 down days are usually enough for a decent spike. For example, if you buy $14 strike VIX June options around 0.50, all it takes is a one point spike in VIX for those options to double.
    May 30 06:22 PM | 2 Likes Like |Link to Comment
  • A Daily Options Trading Strategy For High-Flying Stocks [View article]
    Kevin was permanently banned from SA due to abusive comments. I would be very careful trading his "system". Despite numerous requests from many readers, he never provided any examples of live trades.
    May 27 10:39 AM | 1 Like Like |Link to Comment
  • Could This Strategy Be The Holy Grail Of Investing? [View article]
    Agree.. but there is one thing that will be common to all crashes: options IV will explode.

    So lets assume that we are hedging a 100k portfolio with 8 Jan15 188 puts and selling 3 weekly puts against them, which are worth around 7.5k today. Lets assume that the markets crashes by 20%. This hedge will be worth around 20k with IV unchanged. However, if IV jumps to 40% (which is very conservative estimate, in 2008 it reached 60-70%), the hedge will be worth over 25k. If the market continues down, IV will continue to rise. So the hedge will provide at least 5-10% more protection than the market crash.

    So it might not provide 28% return like in 2008 (significant portion of that return was caused by the stock selection), but it's pretty much guaranteed to more than offset the losses from the stocks/ETF portfolio and provide you a positive return when the market crashes. And this makes the whole difference.
    May 12 02:58 AM | Likes Like |Link to Comment
  • A Conservative Options Strategy For Directional Traders [View article]
    The 70% is based on the delta of the short strike and is an APPROXIMATE measure of the probability of expiring worthless, so it's the second case.

    Your calculation is correct, but there are three important factors to consider.

    First, 70% is not the exact number - it could be 71 or 72, which will slightly change the calculation. Second, over time, IV tends to be slightly higher than HV which puts the odds in favor of options sellers. Third and most important, we will not hold till expiration anyway - we will close early for a profit or a loss. So by actively managing the trade, we are increasing the odds.
    May 8 10:50 AM | Likes Like |Link to Comment
  • A Different Way To Hedge With VXX [View article]
    Any strategy following the spike would be considered fairly high risk because you never know if the spike has ended or is it beginning of something bigger. So shorting volatility on any spike would be very risky. I prefer to wait for VIX go below 13 and then go long volatility.
    May 7 09:28 AM | Likes Like |Link to Comment
  • Could This Strategy Be The Holy Grail Of Investing? [View article]
    As we usually roll about one week before expiration, the assignment risk is virtually non-existent. As Reel mentioned, even if assigned, it is not a negative, as you will have fully captured any extrinsic value and you can simply close the position and roll forward.

    We are about a year since the article has been written, and so far the strategy performs EXACTLY as designed. With one of the strongest bull runs in the recent history, the Anchor strategy lagged the markets by 3-4% on a yearly basis. Wouldn't you be happy to give up 3-4% per year in strong bull markets, knowing that you are fully protected against market crash?
    May 7 08:59 AM | Likes Like |Link to Comment
  • Apple: Examining The Dividend Disappointment [View article]
    Many people are so blind on AAPL stock that they refuse to see the reality. And the reality is very simple: the last quarter was nice, but in no way did it justify 15% increase in a stock price.

    Based on some comments, many people just have no idea how split and buyback impact the stock prices. The simple truth is that both have ZERO impact on the real earnings. ZERO.

    Reminds me the SA articles from 2 years ago where everyone predicted a $1,000 price as a done deal.. We all know what happened afterwards.

    And before all fanboys come after me, I'm not short or long AAPL (or any other stock). I'm trading options only and don't really care what the stock does.
    May 5 06:50 PM | Likes Like |Link to Comment
  • Apple: Examining The Dividend Disappointment [View article]
    I believe the author's position (or lack of it) is completely irrelevant to the quality (or lack of it) of the article. Bill is a well respected contributor and the fact that he does not own AAPL stock is not supposed to prevent him from writing about it.

    The reaction of many AAPL fanboys here is another evidence that many people simply have their judgement clouded when it comes to AAPL.
    May 5 01:24 PM | Likes Like |Link to Comment
  • Apple: Examining The Dividend Disappointment [View article]
    Not even close. AAPL's ATR is $10 - 90% of the dividend. INTC's ATR is 0.40, 44% of the dividend. In addition, AAPL can and does move 5-6 times the dividend in matter of couple weeks. INTC? Never.

    Dividend rate matters mostly for stocks that move on average 5-10% per year. For those stocks, the dividend is a nice addition to the capital gains. AAPL in good times moves up 20-30%/year, and in bad times the same amount down. If you bought it at $705, how does a $12 dividend help you? It might take years to go back to that level.
    May 5 12:00 PM | Likes Like |Link to Comment
  • Apple: Examining The Dividend Disappointment [View article]
    Frankly, I could never understand the excitement about a $12 dividend for a stock that can routinely move that much in 1-2 days.
    May 5 11:02 AM | Likes Like |Link to Comment