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  • Correction 2014: Are You Prepared? [View article]
    To quote my partner Chris Welsh, “If your investment adviser has you in a small-cap fund, a mid-cap fund, a large-cap fund, a foreign investment fund, a commodity fund, a bond fund, and a high dividend fund such as a REIT or pipeline, and tells you that you’re adequately diversified, find a new investment adviser. In a market crash, ALL of those asset classes will get hammered.

    Sure, on a week to week basis in a bull market you are diversified and relatively protected against company and sector risk. But you are horribly exposed to market risk, and the vast majorities of investment advisers either simply do not understand this or believe that “that’s just the way things are.” However no investor should accept that answer.”

    Just look what happened in 2008. Think it won't happen again?
    Jun 6, 2014. 06:58 PM | 16 Likes Like |Link to Comment
  • The Day I Sold Everything [View article]
    I'm reading all the arguments about the taxes and the dividends, and it makes me laugh very loud.

    Tax should be among the last arguments in your investment decisions. If you have to pay tax, that's a good thing - it means you made a profit. What is better: to sell and pay the tax, or to hold and lose all the gains if it pulls back?

    As for the dividends - well, dividends really helped those who held citigroup or other financial stocks in 2008. If your stock loses 30-50%, is 4% dividend really relevant? And if this happens, there is a good chance that dividend will be cut anyway. And even if not - not fool yourself that "it's only a paper loss". A loss is a loss. For some stocks it might take generations to recover.

    Timing the markets is a difficult task, and there are many arguments against it. Taxes and dividends are NOT among those arguments.
    Jul 25, 2014. 04:20 PM | 13 Likes Like |Link to Comment
  • Trading Facebook Ahead Of Earnings [View article]
    Could you please clarify how the straddle is making between 130% and 1050%?

    The stock closed at 26.84 today. The ATM straddle (27 strike) was trading at 4.5. The stock is trading at 23.86 AH. That means the calls almost worthless and the puts worth around 3.30-3.50 (including some time value). The way I see it - the move was less than expected and the straddle will actually lose money.
    Jul 26, 2012. 07:32 PM | 13 Likes Like |Link to Comment
  • Trading Facebook Ahead Of Earnings [View article]
    I don't have any agenda. I asked you a simple question: please provide the numbers to back up your "130% to 1050% gains". The IV was inflated before the earnings and collapsed after the earnings. I provided a simple calculation showing that no matter when the options have been purchased, those gains were not possible. Not even close. If I'm wrong, please provide the numbers to prove me wrong.
    Jul 27, 2012. 01:37 PM | 12 Likes Like |Link to Comment
  • Trading Facebook Ahead Of Earnings [View article]
    Simple math shows that FB straddle at 4.50 was pricing a 16% move. The stock had to move 16% just to break even, not to mention 130% gain. The stock moved so far 14% so the straddle would be a loser. In order to produce the 105% gain, the stock had to move 9 points - that's 33%. 1050% gain would require the stock to move 45 points.
    Jul 27, 2012. 11:26 AM | 12 Likes Like |Link to Comment
  • Trading Facebook Ahead Of Earnings [View article]
    How Zenga is relevant to my question?

    You said Straddle's are earning 130% to 1050% gains - I asked you a simple question: how do you get those gains with the stock down less than expected by the options prices?

    A simple answer would do: the entry price of the straddle and the exit price of the straddle.
    Jul 27, 2012. 07:33 AM | 11 Likes Like |Link to Comment
  • More Options For Options Traders [View article]
    I'm not sure what research are you referring to but allow me to disagree. Options are extremely versatile tool that can be used for many purposes. Leverage is only one of them. You can use them to hedge your stock holdings. You can use them to repair the stock gone bad. You can use them as a standalone strategies to generate income. You can use them as non-directional strategies (which you cannot do with stocks).

    In my opinion, investing in the stock market without using options is like driving a car without insurance. Of course successful options trading requires experience, skills and effort. People don't become successful overnight in any area, and options trading is no exception. I have successfully implemented some of the strategies mentioned in the article for years. Calling it gambling simply shows your complete ignorance in the subject.
    Dec 8, 2012. 10:54 AM | 9 Likes Like |Link to Comment
  • Apple, I Want My Money Back! [View article]
    Like I mentioned in the article, there is no such thing as the best strategy. Every strategy will work the best in different conditions. Are you ready to bet your house that AAPL will be above $700 by June?

    You call a 25% decline on the largest company on the earth "normal"? There is nothing normal about it. The yearly dividend really helped those poor "investors" who bought the stock at $705. They are sitting on a 17k loss, but they got a whopping $265 dividend meanwhile.

    How exactly the strategy I described increases your exposure?

    I'm always amused to see those "long time investors" who comment on options articles, probably having no idea about options but somehow implying that they are better by being "investors" as compared to "speculators".

    I'm an options trader, that's my way of making money. If you want to call it speculator, be my guest. Options is a wonderful tool if used correctly, and can significantly enhance your returns.
    Dec 13, 2012. 06:19 PM | 8 Likes Like |Link to Comment
  • Has CNBC Lost Its Mojo? [View article]
    There is one thing that most people don't understand. The goal of CNBC is not to make money for an average viewer. Its goal to make money for its advertisers and sponsors by increasing the ratings at any cost. The last thing they think about is your best interest.

    When Pete Najarian or Dan Nathan give you a trade on Fast Money, their own goal is to tease you to buy a subscription to their overpriced newsletters.

    Relying on CNBC for your trading/investing decisions is a recipe for disaster.
    Aug 9, 2012. 12:12 AM | 8 Likes Like |Link to Comment
  • Apple's Implied Volatility: What Does It Tell Us? [View article]

    Thank you for educating me.

    I was referring to IV (Implied Volatility), you are talking about HV (Historical Volatility).
    Mar 19, 2012. 01:50 PM | 7 Likes Like |Link to Comment
  • How I Played Apple's 'Pullback' [View article]

    First of all, what might be decent living for you might not be decent for someone else and vice versa. Second, even if someone tells you he is making 500k per year, could you really verify it’s true? Take our friend pedro for example. He keeps repeating on every Apple article that he owns 20k shares of the stock. That’s 12M dollars. Assuming that he is not that stupid to put all his eggs in one stock (even AAPL) we can assume he is worth at least $25-30M. Yet he keeps posting on SA and trying to prove to everyone the obvious – how great Apple is. Pedro, which part of “Apple is a great company and the prospects of the stock remain very bright.” you didn’t understand?

    Now, what really matters is not how much you make in dollar terms but the percentage return. If you have 400k and make 400k per year, that’s great. If you have 5M and make 400k, then not so much.

    You say you make your living from trading. What do you trade? How much do you make per year (percentage wise)? Why do you think people cannot make money with sophisticated options strategies? Is it because you don’t understand them?

    If you consider SA articles a waste of time, you definitely have a choice – don’t read them.
    Mar 16, 2012. 01:39 PM | 7 Likes Like |Link to Comment
  • Could This Strategy Be The Holy Grail Of Investing? [View article]
    I would guess that if I do 20 years you will say do 40 years..
    Jun 6, 2013. 11:57 PM | 6 Likes Like |Link to Comment
  • Dead Company Walking: 5 Reasons BlackBerry 10 Marks The End [View article]
    I'm really amused to read all those "scientific" articles and analysis. They are worthless. All of them. Show me one person who predicted 4 years ago that RIMM will go from $130 to $6.. Show me one person who predicted 4 months ago that AAPL will go from $700 to $440..

    The simple truth is that tech world is completely unpredictable. I would not be surprised to see BBRY going out of business 5 years from now, but I will also not be surprised to see their stock price equal to AAPL's.
    Feb 5, 2013. 09:50 AM | 6 Likes Like |Link to Comment
  • An Options Idea To Safely Finance Your Retirement Using Apple [View article]
    There are few issues with this trade.

    First of all, it is unnecessary complicated. Instead of using 6 trades, you could simply use one diagonal spread to create a similar P/L graph. But if it was that simple, who would pay for your subscription service?

    Second, the P/L graph doesn't take volatility changes into consideration (but this is probably not a big deal).

    But the biggest problem is the title. People read the title and put all their retirement money into such a trade to "safely" get 30-60% per year. This is not a bad trade assuming that AAPL continues to outperform - however, this is NOT a trade for a retirement money. This is a leveraged options bet and it can easily lose 30-50%.

    Didn't you learn nothing from the SEC complaint?
    Oct 7, 2012. 11:04 AM | 6 Likes Like |Link to Comment
  • Don't Get Pulled Into A Seductive Pre-Earnings Options Trap [View article]

    This is a great article. I have been using those strategies for a while with great success. The thesis is to use the greed of most traders who buy those inflated options ahead of earnings hoping to make a killing. I buy them few days before earnings and sell just before the announcement, when the IV has peaked.

    As a side note, I stopped reading Russell's articles. His claims of hundreds percents of gains are simply baseless and any attempt to have a civilized discussion is a complete waste of time. He cannot provide one simple number to support his claims.
    Aug 6, 2012. 10:03 PM | 6 Likes Like |Link to Comment