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  • The Fed Spent $23 Billion In 3 Days, But Still Had A Hard Time Pushing Up Stocks [View article]
    My only question is how this small cadre of conspiratorial fifth columnists find time to buy and sell stocks, while they're so busy trying to take over the world.
    Aug 27, 2015. 09:34 PM | 2 Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #80 [View instapost]
    LMH:

    I'm not done worrying. I just see a few reasons to increase exposure in a measured way. One thing that's nice about long-dated call options on severely-depressed issues is that they offer huge upside for very little cost, relatively, and one's downside is 100% defined. A number of energy issues have calls all the way out to Jan 2017. That provides a lot of time for recovery.

    I don't think the Fed action, even if they raise 0.25%, will do much of anything beyond whatever action it inspires for a day.

    The bigger question is whether energy decided to join in the bounce for reasons beyond the silly Venezuela OPEC news. That's near meaningless in and of itself.
    Aug 27, 2015. 07:52 PM | Likes Like |Link to Comment
  • The Case For A 300-500 Point Correction In The S&P 500 - And Still A 'Secular Bull' [View article]
    RD:

    Black-swan news, like that, is always a bummer.
    Aug 27, 2015. 06:59 PM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #80 [View instapost]
    Some suggestions for those who may have gotten inspired wish to nibble on energy and commodity names:

    We've been looking fro signs that the energy/commodity slaughter might end and for a bottom to have been put in. Today may or may not be that time, but the surge in oil prices and commodities, as well as the participation of the companies in the space is encouraging. Also, the close of the SPX above 1970, the level at which it was when disaster struck Monday, is also quite encouraging.

    So, how does one proceed?

    First, and simplest, one can just buy some common shares in various destroyed names. No magic there, but some offer huge upsides potentially and several still pay outsize dividends.

    Another approach is to find issues with accompanying preferred shares that have been decimated. This has the benefit of paying fat dividends, which cannot be cut, and with little or no prospect that they will be suspended, barring disaster. And, they have lots of price upside, too, if not the multiples of the common shares. Various issues can be researched at http://bit.ly/1hoLR6a.

    Another way to approach the space is by selling puts and/or buying calls, or advanced combinations of both. I won't go into the complex straddles and spreads, but will offer a thought or two on simple plays.

    Puts, of course, have their upside limited by the option premium one collects. Naturally, this premium can varying, depending on whether one sells in-the-money (ITM) puts (i.e. strike prices higher than current share price). At-the-money (ATM) or out-of-the money (OTM) puts offer the best downside protection because, even if shares drop and one has to buy shares put to them, the basis of the shares will be further reduced by the option premium. Of course, with ATM or OTM put sales offer no price appreciation possibilities, simply the premium income. If one sells ITM puts, one can collect some premium income, plus the amount of price appreciation between the current price and the ITM strike price. The higher the strike, the less premium income will be associated with the option. The downside of puts sales, of course, is that be low the strike price one's risk is unlimited down to zero. I don't recommend selling puts in highly risky plays that have any genuine risk of going under.

    The other side of the coin is to buy calls. Call buying has one clear benefit: the downside is limited to the price of the call, period. I like to play calls in two manners: 1) buy very-long-dated OTM calls in depressed names, on the supposition that over time they will exceed the strike price, thereby leveraging up gains very quickly thereafter. Huge multiples can be made with properly-selected OTM calls; 2) buy shorter-dated ITM calls. These allow one to make gains instantly, should prices go higher, and they allow gains, unlike the OTM calls, without the need to reach some higher strike price. However, ITM calls are more expensive than OTM calls, obviously, for similar expiration dates, so the percentage gains are reduced, as the leverage is less. Sometimes, a long-dated ITM call is a worthwhile substitute for a long-dated OTM call, if the option premiums are too high. ITM calls have lower option premiums because some or much of the option price is reflected in the intrinsic ITM value of the call. OTM calls are 100% time value with no intrinsic value.

    Here, again, calls can be nice vehicles because they can offer more upside leverage than owning shares, and they have a defined downside. One last thing, of course, about sellin puts or buying calls, one does not get to participate in the dividend stream during the holding period, although dividend effects on share prices are imputed in the option prices.

    So, there you have it, a brief crash course is using options to speculate in the energy/commodity space. Maybe, this will provide some ideas.
    Aug 27, 2015. 06:58 PM | 1 Like Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    RD:

    My last post on this debate, fwiw:

    We didn't have "price movements" yesterday. We had a single issue, XOM, being higher while everything else languished. One can find a Lone-Ranger stock every day, but that hardly says a sector is going to take off in 24 hours.

    Let's just agree to differ.
    Aug 27, 2015. 01:08 PM | Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    RD:

    Am also impressed with your FCX selection. I had SCCO calls, but FCX even better.

    Still don't concur on AAL short. They are excellent, unlike UAL, and they're already selling 31% below their recent high. I doubt that a downside will get any traction, even with higher oil, if economy and markets advance. If the economy tanks, then, perhaps, it goes lower, but so will almost everything.
    Aug 27, 2015. 01:04 PM | Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    RD:

    So, now, you're asserting that, because XOM, itself, might have an opinion about oil prices, all their own employees ran out and bought the stock yesterday? Or, did they tip off their favorite hedgies, so they could front run?

    A better explanation for XOM's movement being followed today by the general energy prices is what Leo Durocher is reputed to have said, "Sometimes, it's better to be lucky than good."
    Aug 27, 2015. 12:10 PM | Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    RD:

    Look, I'm as happy as anybody to see oil rise, along with energy names, but don't try to tell me that XOM was some kind of bellwether for today's move, when it was about the only energy name, among scores, that moved upward yesterday. Nobody said you were "dumb," but deciding that energy had turned because XOM outperformed the sector yesterday still remains a dubious assertion.
    Aug 27, 2015. 11:39 AM | Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    What two? You really think airlines are going to tank further after already having been blasted?

    I'd bet they've hedged all kinds of fuel-cost exposure at these low oil prices.
    Aug 27, 2015. 11:11 AM | Likes Like |Link to Comment
  • Best Ways To Invest -- What's Your Opinion? A Place To Share Ideas! #80 [View instapost]
    Although many still won't concur, in my estimation it's still all about oil. If oil perks up, the market will stay happy; if oil tanks, then the market will worry anew about debt problems across several sectors.
    Aug 27, 2015. 10:58 AM | 2 Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    ab:

    Well, the short-term question was whether SPX support at 1862 was going to hold. Apparently, that's been answered.

    When we got the large rally yesterday that held, but neither oil nor oil names (despite RD's fascination with XOM) didn't follow, I was waiting to see how that divergence would be addressed, i.e., either indices coming back or energy names rallying. Today, perhaps, abetted by the GDP report, we are getting the answer, at least for the day.

    I had already begun to make base positions in several majors, and now I will examine the field of preferred issues from smaller names in the energy space, where prices have declined to offer exceptional yields. Midstream players are also suddenly more interesting.
    Aug 27, 2015. 09:13 AM | 1 Like Like |Link to Comment
  • The Case For A 300-500 Point Correction In The S&P 500 - And Still A 'Secular Bull' [View article]
    RD:

    The divergence present the same binary situation we encountered before China hysteria. Either the market will pull energy up, or energy will pull the market down. They cannot keep going in opposite directions.
    Aug 26, 2015. 09:19 PM | 1 Like Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    E:

    The market is also on fire on the Gulf Coast for homes over $3MM. And, cash deals still, predominate.
    Aug 26, 2015. 09:16 PM | Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    FG:

    Just a brief comment on the names you mentioned, and more:

    Certainly, for anyone with solid nerves and very quick fingers there were some startling buys that could have been made on Monday morning. Add GILD, AAPL and a few more. However, some of those look like better quick flips than buy-and-holds. There's nothing much in VZ's chart to recommend it, as it's been a dog since early 2013, nor MRK, presently, and just a maybe on GE, and both the latter have flat earnings forecasts.

    For those that made instant big killings, it's great, but just because they may have gotten a steep discount and instant rebound doesn't necessarily convert the issue into a good hold. Fundamentals and trends remain whatever they were.
    Aug 26, 2015. 02:49 PM | Likes Like |Link to Comment
  • Weekly Market Update - August 22nd, The FED And EARNINGS, Amidst A Strong Dollar And Weak Crude Oil [View article]
    FG:

    I picked 1950 because that was the post-panic high-water mark. I'd feel even better if we exceeded 1971, Friday's close.
    Aug 26, 2015. 02:35 PM | Likes Like |Link to Comment
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