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Vikas Agarwal
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I believe in the philosophy of value. Not just in investing but in most of the decision that I take in life. The key is to recognize the value and to keep an independent opinion irrespective of the mood of the crowd. Last year's events rattled me too and inspired me to search for value in other... More
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  • Intel option trades for Monday
    Intel has been rangebound for some time. One option strategy that exploits such situation is 'Butterfly'.
    The trade is as follows
    Buy 1 20$ AUG call for 83c
    Sell 2 21$ AUG calls for 31c
    Buy 1 22$ AUG call for 8c

    Your total debit is 29c. Your breakeven point for below is 20.29$ and from top is 21.7$. The best case is when INTC closes at 21$ at option expiry. In that case you will have a gain of 333%.

    Disclosure: Long
    Tags: INTC
    Aug 01 8:31 PM | Link | Comment!
  • Trade log for July
    July was a month when a lot of companies declared their quarterly earnings. I was fortunate enough to find some really cheap options and as expected good earnings from tech did the rest of the trick. Because the share prices traded lower after the initial reaction to the earnings, I could not make as much profit as I could have made. For example the intel call mentioned below could have been sold for 1.25$ which would have given me a profit of 600%. But this is the nature of the game and we should live with it.  I dont have many big bets left on the table. The only big bet I have is pfe where I have bought shares, sold puts and bought calls. Apart from that all my bets are sold out of money puts for the front month except NVDA which fell a lot after I sold the puts on it and hence is now in the money. Moving forward I will stay mostly in cash and as market remains rangebound I may sell some out of money puts for the front month. Here is my complete trade log for July.

    Closed Trades
    Bought Intel Jul 21$ calls for 20c. Sold for 40c for a 100% profit
    Bought Microsoft Aug 26$ calls for 45c. Sold for 65c for a 40% profit
    Sold Microsoft Jul 26$ and 25$ puts for 45c each. Expired worthless. 100% profit
    Sold Jul AAPL 250$ puts for 11$, bought back for 5$. 50% profit
    Bought Jul AAPl calls for 4.35$. Sold for 8$. 40% profit
    Bought PFE 15$ aug calls for 15c. Sold for 28c. 90% profit

    Open Trades
    Bought PFE AUG 15$ calls for 15c
    Bought PFE SEP 15$ calls for 80c
    Bought PFE shares at 15.1$
    Sold PFE AUG 16$ puts for 1.16$
    Sold PFE AUG 14$ puts for 30c
    Sold NVDA AUG 10$ puts for 40c
    Sold NVDA AUG 8$ puts for 10c
    Sold INTC AUG 19$ puts for 12c
    Bought FAZ at 13.75
    Sold MT 25$ put for 30c
    Sold EBAY 19$ put for 50c

    Jul 31 3:08 PM | Link | Comment!
  • Why everyone loves to hate Goldman Sachs
    In the movie Devil's Advocate, the character of Kevin Lomax says to the Jury in defense of his client - "I don't like Alexander Cullen. I don't think he's a nice person. But this isn't a popularity contest; it's a murder trial". I feel the same way about Goldman Sachs.
    But this post is not about Goldman Sachs; This post is about people who are now baying for Goldman's blood. SEC charges have drawn the first blood and now everyone from big banks, insurers to politicians are asking for more.

    First lets talk about the big banks and insurers that bought the CDOs and insured the bonds. These giant institutes were trading against then a nobody hedge fund manager John Paulson whose expertise were merger arbitrage, not mortgage bonds. From 2004-2007, John Paulson was derided by everybody for betting against the housing market. He had been slowly bleeding money to buy protective insurance which was used to grant bonuses to the employees of these banks and insurers. When the bottom fell out, and these entities were bailed out by the government, they are playing victims? These entities are acting stupid as if big bear John Paulson and Goldman Sachs defrauded them. These banks and insurers are not stupid, they are criminals. It is because of the greed of the executives of these entities for small profits and bonuses that the whole economy of the country almost collapsed. But of course now that US Government owns 80% of AIG, they cant really be the bad guys, it must be Goldman Sachs and John Paulson.

    Now lets talk about the politicians who are demanding that heads are rolled, fines are slapped and bans are placed on Goldman. Yes I was outraged when Goldman paid 4.7 billion $ to its employees while they were bailed out by the taxpayers but then again what would you expect Goldman to do with billions of the profit they make? Talking about big profits, who is supplying Goldman with cheap money? Who gave Goldman 100c on a dollar for the puts they bought from AIG? If Goldman benefits from government's corruption, you can't blame Goldman for it.
    Politicians across the Atlantic are as populist as this side. One of them called Goldman "morally bankrupt" and demanded a ban on Goldman getting government projects. One must realize that Goldman Sachs is a corporation. Its job is not being "morally wealthy" but to make profit like every other corporation. If Goldman Sachs is "morally bankrupt" so is every government in the world. It is funny that politicians can get away with a lot more outrageous behavior and then have the gall to call others "morally bankrupt".

    To sum it up, the problem that everyone has with Goldman Sachs is not how they deal with their clients or how they trade using proprietary software programs or how they compensate their employees but that they make profit. A lot of it.

    Disclosure: Long GS
    Tags: GS
    Apr 21 2:29 AM | Link | Comment!
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