MILESCFA's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/189638/comments http://seekingalpha.com/article/176529-four-reasons-to-invest-in-synovus-financial?source=feed#comment-794641 794641
"We believe this cycle will product similar type investments and Synovus is one of our favorites....
WHAT ARE THE OTHERS???]]> Mon, 07 Dec 2009 14:17:27 -0500
"We believe this cycle will product similar type investments and Synovus is one of our favorites....
WHAT ARE THE OTHERS???]]> http://seekingalpha.com/article/176666-technical-analysis-apple-heading-down?source=feed#comment-792526 792526
drbob66: Have you looked at MarketClub much? Their trade triangle seem to be a proprietary technical analysis system and aren't "triangles" in the technical analysis sense. I look at them for market comments because they tend to "say the concensus" and I want to know what everyone thinks, but I don't follow MarketClub enough to know if their triangles generate good signals.

Anyone familiar with the success of MarketClub signals?]]> Sun, 06 Dec 2009 10:11:21 -0500
drbob66: Have you looked at MarketClub much? Their trade triangle seem to be a proprietary technical analysis system and aren't "triangles" in the technical analysis sense. I look at them for market comments because they tend to "say the concensus" and I want to know what everyone thinks, but I don't follow MarketClub enough to know if their triangles generate good signals.

Anyone familiar with the success of MarketClub signals?]]> http://seekingalpha.com/article/176062-return-on-equity-is-not-always-what-it-seems?source=feed#comment-786684 786684
Good job; good point. Thank you,]]> Wed, 02 Dec 2009 13:11:58 -0500
Good job; good point. Thank you,]]> http://seekingalpha.com/instablog/3-david-jackson/35833-new-instablogs-worth-watching?source=feed#comment-775205 775205 Tue, 24 Nov 2009 11:04:22 -0500 http://seekingalpha.com/article/173466-john-hussman-s-peak-pe-ratio-as-a-long-term-market-indicator?source=feed#comment-761839 761839 Mon, 16 Nov 2009 08:55:20 -0500 http://seekingalpha.com/article/173493-franco-nevada-building-up-a-royalty-war-chest?source=feed#comment-761834 761834 Mon, 16 Nov 2009 08:52:25 -0500 http://seekingalpha.com/article/172846-today-in-commodities-potential-reversal-looming?source=feed#comment-760334 760334 > Anybody knows what Goldman roll is ?

Goldman Sachs is a big player (in all markets). Nearing expiration of the active contract, GOLDMAN (and others) have to ROLL THE EXPIRING CONTRACTS INTO THE NEXT ACTIVE FUTURES CONTRACT. It can cause short-term pricing volatilities.]]> Sat, 14 Nov 2009 13:13:15 -0500 > Anybody knows what Goldman roll is ?

Goldman Sachs is a big player (in all markets). Nearing expiration of the active contract, GOLDMAN (and others) have to ROLL THE EXPIRING CONTRACTS INTO THE NEXT ACTIVE FUTURES CONTRACT. It can cause short-term pricing volatilities.]]> http://seekingalpha.com/article/170718-wealthtrack-why-jim-grant-is-bullish-on-the-recovery?source=feed#comment-742878 742878
Nominal GDP actually grows FASTER during secular Bear markets than it does during secular Bull markets. The reason is that often the secular Bear market experiences inflation, which artificially boosts NOMINAL GDP, but the inflation cause the market (PE) multiple to compress.

I have an instablog (my only one, in fact) that goes into greater detail on this issue, but if Grant is buying gold, it's fairly obvious he's NOT bullish on the stock market.]]> Tue, 03 Nov 2009 15:20:35 -0500
Nominal GDP actually grows FASTER during secular Bear markets than it does during secular Bull markets. The reason is that often the secular Bear market experiences inflation, which artificially boosts NOMINAL GDP, but the inflation cause the market (PE) multiple to compress.

I have an instablog (my only one, in fact) that goes into greater detail on this issue, but if Grant is buying gold, it's fairly obvious he's NOT bullish on the stock market.]]> http://seekingalpha.com/article/169521-opportunity-knocking-in-the-form-of-a-vix-spike?source=feed#comment-735507 735507
www.cboe.com/micro/vix...

FYI: I could only find VIX futures info on the CBOE website above. I have a hard time finding VIX futures quotes, being neither on my ThinkorSwim nor TradeStation platforms (futures "turned on" on both). Also, ThinkorSwim shows VXX as "hard-to-borrow", so while your concept is fascinating, where do you find it "not difficult to short anymore"?]]> Thu, 29 Oct 2009 11:07:22 -0400
www.cboe.com/micro/vix...

FYI: I could only find VIX futures info on the CBOE website above. I have a hard time finding VIX futures quotes, being neither on my ThinkorSwim nor TradeStation platforms (futures "turned on" on both). Also, ThinkorSwim shows VXX as "hard-to-borrow", so while your concept is fascinating, where do you find it "not difficult to short anymore"?]]> http://seekingalpha.com/article/168447-mitigating-gamma-losses?source=feed#comment-726815 726815 Fri, 23 Oct 2009 09:35:31 -0400 http://seekingalpha.com/article/167115-5-things-to-consider-before-buying-and-holding?source=feed#comment-719256 719256
seekingalpha.com/user/...
...]]> Sun, 18 Oct 2009 09:42:28 -0400
seekingalpha.com/user/...
...]]> http://seekingalpha.com/article/167102-readers-pick-the-top-20-5-year-horizon-stocks?source=feed#comment-719241 719241
seekingalpha.com/user/...

I urge you to at least view the first chart in my instablog, which is a 90 yr Dow chart showing percentage ups and downs. Volatility rules in a secular bear
...]]> Sun, 18 Oct 2009 09:26:41 -0400
seekingalpha.com/user/...

I urge you to at least view the first chart in my instablog, which is a 90 yr Dow chart showing percentage ups and downs. Volatility rules in a secular bear
...]]> http://seekingalpha.com/article/166225-think-twice-how-people-are-fooled-by-irrelevant-data?source=feed#comment-714758 714758
:-)

...]]> Wed, 14 Oct 2009 08:31:02 -0400
:-)

...]]> http://seekingalpha.com/article/164985-the-liquid-upside-for-energy-recovery-s-desalination-technology?source=feed#comment-708186 708186
The US Navy seemingly is a leader in desalination. Anyone know if ERII sells to them?...

www.chemistrytimes.com...

I also recently read of a new advancement in desalination but since I have already exited ERII I didn't bother to keep the article. Anyone know what's the leading edge?
...]]> Thu, 08 Oct 2009 01:58:43 -0400
The US Navy seemingly is a leader in desalination. Anyone know if ERII sells to them?...

www.chemistrytimes.com...

I also recently read of a new advancement in desalination but since I have already exited ERII I didn't bother to keep the article. Anyone know what's the leading edge?
...]]> http://seekingalpha.com/article/164488-option-players-aren-t-buying-the-rally?source=feed#comment-702430 702430 ... Check out information about Max Ansbacher....
> ttp://ansbacherusa.com/files...
======================...
Thanks Surly. His strategy sounds a lot like what I do; however, whereas I use to sell naked straddles and strangles, as the market volatility went up dramatically, I began to "insure myself" by moving to iron condors and butterflies AND by pushing out (down) the put strikes I sell. The "cost of insurance" has been noticeable! Any thoughts?
BTW: As for the "excess put premium" research, I wouldn't mind a study to two, or a clue as to a "good google search term" to find these studies.

I don't suppose the Ansbacher index is available on the web anywhere, is it?

Lastly, on an options related message board, a (supposed) hedge-fund programmer hinted at a similar index he used. The index was based on the ratios of OTM strikes and brought to mind "a spider chart" (or like a coiled piece of metal used in a wind-up toy). He measured the "compression" as an indicator whether the market was headed up or down (I think as it "coiled" tighter and tighter, he expected a move, but I'm not sure it was also directional). Interestingly, he said the "ratios" between strikes exhibited Fibonacci ratios. Do you know this indicator (any references?)?]]> Sun, 04 Oct 2009 11:14:52 -0400 ... Check out information about Max Ansbacher....
> ttp://ansbacherusa.com/files...
======================...
Thanks Surly. His strategy sounds a lot like what I do; however, whereas I use to sell naked straddles and strangles, as the market volatility went up dramatically, I began to "insure myself" by moving to iron condors and butterflies AND by pushing out (down) the put strikes I sell. The "cost of insurance" has been noticeable! Any thoughts?
BTW: As for the "excess put premium" research, I wouldn't mind a study to two, or a clue as to a "good google search term" to find these studies.

I don't suppose the Ansbacher index is available on the web anywhere, is it?

Lastly, on an options related message board, a (supposed) hedge-fund programmer hinted at a similar index he used. The index was based on the ratios of OTM strikes and brought to mind "a spider chart" (or like a coiled piece of metal used in a wind-up toy). He measured the "compression" as an indicator whether the market was headed up or down (I think as it "coiled" tighter and tighter, he expected a move, but I'm not sure it was also directional). Interestingly, he said the "ratios" between strikes exhibited Fibonacci ratios. Do you know this indicator (any references?)?]]> http://seekingalpha.com/article/164439-ism-numbers-point-to-a-v-shaped-recovery?source=feed#comment-700599 700599
seekingalpha.com/artic...

...]]> Fri, 02 Oct 2009 15:36:32 -0400
seekingalpha.com/artic...

...]]> http://seekingalpha.com/article/164488-option-players-aren-t-buying-the-rally?source=feed#comment-700578 700578
Similarly, the put/call ratio use to be a good contrarian indicator, which might seem to imply that the skew indicator would ALSO be a contrarian indicator. Any thoughts?... or any recent "academic" studies that you can point me to for more info (a net search proved ineffective).]]> Fri, 02 Oct 2009 15:18:32 -0400
Similarly, the put/call ratio use to be a good contrarian indicator, which might seem to imply that the skew indicator would ALSO be a contrarian indicator. Any thoughts?... or any recent "academic" studies that you can point me to for more info (a net search proved ineffective).]]> http://seekingalpha.com/article/163916-collapsing-volatility-etf-opportunity?source=feed#comment-697185 697185
but the caveat is that you typically don't want to be buying options when volatility is really high (unless you expect higher volatility).

I went long out-the-money vertical call spreads using LEAPS around the March low and discovered one thing missing in MOST option articles - liquidity. My LEAP trades were fairly illiquid and I have to "give in" when trying to close them. Several of the ETFs in the list above have options that "trade by appointment", so ALWAYS be aware of option liquidity.]]> Wed, 30 Sep 2009 14:28:36 -0400
but the caveat is that you typically don't want to be buying options when volatility is really high (unless you expect higher volatility).

I went long out-the-money vertical call spreads using LEAPS around the March low and discovered one thing missing in MOST option articles - liquidity. My LEAP trades were fairly illiquid and I have to "give in" when trying to close them. Several of the ETFs in the list above have options that "trade by appointment", so ALWAYS be aware of option liquidity.]]> http://seekingalpha.com/article/163197-invest-in-lowe-s-with-leap-options?source=feed#comment-691318 691318
BTW: On my NOV buy-write, in my acct with portfolio marginning, the return is 828% annl.... :-)

and oh! You can buy the convertible funds using margin too!]]> Fri, 25 Sep 2009 15:17:38 -0400
BTW: On my NOV buy-write, in my acct with portfolio marginning, the return is 828% annl.... :-)

and oh! You can buy the convertible funds using margin too!]]> http://seekingalpha.com/article/163197-invest-in-lowe-s-with-leap-options?source=feed#comment-690750 690750
1) With LEAPS, there is LIMITED LIQUIDITY. The +-60c spread in this $25 put does't seem outlandish, but you're going to sell near the bid and pay near the ask until we get a lot closer to maturity. So this is a "buy and hold" play on LOW.

2) The best method for calculating a return on a put like this is "what's your net investment vs the current price" (ie, you might call it the "time premium capture"). The current price is around $21.10 and your net investment is $18. This works out to a 7.0% annl return, not particularly attractive to me in this knid of market (again, I urge you to see my instablog). You could buy the stock and sell the 1/2012 $20 call and obtain an 8.9% ($21.10/$16.40). This is also evident by the "volatility skew" in the 2012 options, where the at-the-money calls are selling at a greater implied volatility than the puts (40.7% vs 36.2%); note the SPX options are "skewed" toward the puts side due to the fear in the market (approx. 2-3% greater for puts). In option selling, a main concept is "selling high volatility" (the puts are the low volatility).

3) LOW's is one of those stocks that has numerous strikes at very small increments (mostly $1). If you did a NOV $20 buy-write, your return is in excess of 20% AND you would get the 1.7% dividend yield AND you could keep rolling the calls at whatever strike you want. And you could change your mind without the liquidity issue.

If you think we're "out-of-the-woods" in this market, I would first urge you to see my instablog. If you're still attracted to this trade, I would point out that there are convertible bond funds by the "reknowned" convertible bond manager Calamos Funds (CHY, CHI) that YIELD 9-10% (or use ETFconnect.com to search for others). If we're out-of-the-woods, these funds will continue to climb as default risk declines, plus you collect the high dividend.]]> Fri, 25 Sep 2009 10:44:17 -0400
1) With LEAPS, there is LIMITED LIQUIDITY. The +-60c spread in this $25 put does't seem outlandish, but you're going to sell near the bid and pay near the ask until we get a lot closer to maturity. So this is a "buy and hold" play on LOW.

2) The best method for calculating a return on a put like this is "what's your net investment vs the current price" (ie, you might call it the "time premium capture"). The current price is around $21.10 and your net investment is $18. This works out to a 7.0% annl return, not particularly attractive to me in this knid of market (again, I urge you to see my instablog). You could buy the stock and sell the 1/2012 $20 call and obtain an 8.9% ($21.10/$16.40). This is also evident by the "volatility skew" in the 2012 options, where the at-the-money calls are selling at a greater implied volatility than the puts (40.7% vs 36.2%); note the SPX options are "skewed" toward the puts side due to the fear in the market (approx. 2-3% greater for puts). In option selling, a main concept is "selling high volatility" (the puts are the low volatility).

3) LOW's is one of those stocks that has numerous strikes at very small increments (mostly $1). If you did a NOV $20 buy-write, your return is in excess of 20% AND you would get the 1.7% dividend yield AND you could keep rolling the calls at whatever strike you want. And you could change your mind without the liquidity issue.

If you think we're "out-of-the-woods" in this market, I would first urge you to see my instablog. If you're still attracted to this trade, I would point out that there are convertible bond funds by the "reknowned" convertible bond manager Calamos Funds (CHY, CHI) that YIELD 9-10% (or use ETFconnect.com to search for others). If we're out-of-the-woods, these funds will continue to climb as default risk declines, plus you collect the high dividend.]]> http://seekingalpha.com/article/162844-equity-market-bulls-history-is-not-on-your-side?source=feed#comment-688339 688339
"> I beg to differ. History is on the bull side,....."

Gary, if you read the one instablog I have written, you will see that Rosenberg is right and you are wrong. I have a 90+yr schart of the Dow broken down into bull and bear markets. We're in a major secular bear and you have to understand that as Roseberg points out, high PEs do not make for good stock market performances.

I also have a couple of book references there that were probably NOT part of your Series 65... they should be!]]> Wed, 23 Sep 2009 20:48:37 -0400
"> I beg to differ. History is on the bull side,....."

Gary, if you read the one instablog I have written, you will see that Rosenberg is right and you are wrong. I have a 90+yr schart of the Dow broken down into bull and bear markets. We're in a major secular bear and you have to understand that as Roseberg points out, high PEs do not make for good stock market performances.

I also have a couple of book references there that were probably NOT part of your Series 65... they should be!]]> http://seekingalpha.com/article/161936-putting-the-equity-rally-in-perspective?source=feed#comment-684007 684007 Sun, 20 Sep 2009 12:44:31 -0400 http://seekingalpha.com/article/161308-natural-gas-has-spiked-60-since-labor-day-why?source=feed#comment-675555 675555
BTW, I know you must be a good economist...
"Couldn't you just have said "can't put more gas in a FULL pipeline?"

:-)]]> Mon, 14 Sep 2009 09:21:20 -0400
BTW, I know you must be a good economist...
"Couldn't you just have said "can't put more gas in a FULL pipeline?"

:-)]]> http://seekingalpha.com/article/161172-federated-investors-using-options-to-win?source=feed#comment-674954 674954
YE07 close $36.99 YE08 close $17.44 down 53%

I wanted to disagree with the author's statement above, but from a cursory glace at IBD's "Investment Mgmt" industry, he's right. Still, being ONLY cut in half doesn't seem wonderful.

The "small" reason I wanted to disagree is that I use to work for a firm that was bought by Eaton Vance (EV), a money manger I know to be of very high quality. It declined slightly less that FII (~47%). Also, FII only started trading from late 1999 according to my charting services, and from 2001-2007 it has essentially traded flat. EV almost tripled during the '01-'07 time frame. Thus I would tend to be indifferent to FII as a stock play by itself, but what about this option play....

The "big" reason I wanted to disagree with the author is...

"Here’s my buy/write combination play with Federated to make an excellent total return with less risk than outright purchase of the shares..."

This is WRONG. The option position is in fact TWICE AS RISKY as the outright purchase of stock, and to wit, has less upside. Why? It's a buy/write plus a naked short of a put. A buy/write limits your upside and has downside risk to "0" (few stocks actually go to zero, but then can!). A short put limits your upside and has downside risk only limited by the fact the stock can't go below zero.

In case you don't realize, if FII finishes below $25, you're long stock that WON'T be called away AND you're short a naked put. Simply stated, for every $1 decline you would be losing $2.

Many authors on Seeking Alpha recommend this strategy (a buy/write and a naked short put) and they act like it's something different. In fact, it's just "doubling down" your bet, a bet that is limited on the upside and "unlimited" on the downside (except stocks don't go below zero). I would recommend you ignore these authors unless you understand the "doubling down", "limited upside" nature of these recommendations. Personally, I'd ignore them anyway.]]> Sun, 13 Sep 2009 17:27:05 -0400
YE07 close $36.99 YE08 close $17.44 down 53%

I wanted to disagree with the author's statement above, but from a cursory glace at IBD's "Investment Mgmt" industry, he's right. Still, being ONLY cut in half doesn't seem wonderful.

The "small" reason I wanted to disagree is that I use to work for a firm that was bought by Eaton Vance (EV), a money manger I know to be of very high quality. It declined slightly less that FII (~47%). Also, FII only started trading from late 1999 according to my charting services, and from 2001-2007 it has essentially traded flat. EV almost tripled during the '01-'07 time frame. Thus I would tend to be indifferent to FII as a stock play by itself, but what about this option play....

The "big" reason I wanted to disagree with the author is...

"Here’s my buy/write combination play with Federated to make an excellent total return with less risk than outright purchase of the shares..."

This is WRONG. The option position is in fact TWICE AS RISKY as the outright purchase of stock, and to wit, has less upside. Why? It's a buy/write plus a naked short of a put. A buy/write limits your upside and has downside risk to "0" (few stocks actually go to zero, but then can!). A short put limits your upside and has downside risk only limited by the fact the stock can't go below zero.

In case you don't realize, if FII finishes below $25, you're long stock that WON'T be called away AND you're short a naked put. Simply stated, for every $1 decline you would be losing $2.

Many authors on Seeking Alpha recommend this strategy (a buy/write and a naked short put) and they act like it's something different. In fact, it's just "doubling down" your bet, a bet that is limited on the upside and "unlimited" on the downside (except stocks don't go below zero). I would recommend you ignore these authors unless you understand the "doubling down", "limited upside" nature of these recommendations. Personally, I'd ignore them anyway.]]> http://seekingalpha.com/article/160545-hedging-the-black-swan-concept?source=feed#comment-668596 668596

On Sep 09 05:55 AM Experienced novice wrote:

> Mr. Konrad, would like to see your 5 ways to hedge but the link does
> not work on Seeking Alpha - anything we can do about that?]]> Wed, 09 Sep 2009 11:03:20 -0400

On Sep 09 05:55 AM Experienced novice wrote:

> Mr. Konrad, would like to see your 5 ways to hedge but the link does
> not work on Seeking Alpha - anything we can do about that?]]> http://seekingalpha.com/article/160144-precious-metals-breakout-fakeout-or-shakeout?source=feed#comment-664728 664728
I had "sideways" options plays that I decided to exit as GLD traced out a narrowing RS (or pennant?). While it would seem to be trying to break out to the upside, I was confused by the so-called H&S for precisely your reason....

"Many are seeing a reverse Head and Shoulders formation here but do not question that a bottoming formation does not generally form at a top."

so I pulled out my John Murphy Technical Analysis book. The "reverse H&S" can be a continuation pattern, however it is the "exception rather than the rule".

Regrettably not much is said to clue us in on whether it will be "a continuation H&S". I would note, however, that as we found out with the S&P's failed H&S, a failure can lead to a swift reversal.

Thia futher complicates the "reverse H&S" pattern because it seems to mean that NOT ONLY does it need to breakout, but if it does, it needs to come back and retests the breakout. If it fails the retest, it could result in a violent failure and thus a swift move down.

Although I don't know which "door" to pick, for these reasons, I've decided to not even play the game right now.

I might not be playing because I just read "Reminiscences of a Stock Operator". The one thing that (in this book) Livermore taught me is "let the markets tell you". So I repeat, not only does GLD have to break out, it has to come back and successfully retest.

Whatever the case, I think the hype and volatility will be beyond imagination. So rather than guess, I'll "let the market tell me".
]]> Sun, 06 Sep 2009 22:54:17 -0400
I had "sideways" options plays that I decided to exit as GLD traced out a narrowing RS (or pennant?). While it would seem to be trying to break out to the upside, I was confused by the so-called H&S for precisely your reason....

"Many are seeing a reverse Head and Shoulders formation here but do not question that a bottoming formation does not generally form at a top."

so I pulled out my John Murphy Technical Analysis book. The "reverse H&S" can be a continuation pattern, however it is the "exception rather than the rule".

Regrettably not much is said to clue us in on whether it will be "a continuation H&S". I would note, however, that as we found out with the S&P's failed H&S, a failure can lead to a swift reversal.

Thia futher complicates the "reverse H&S" pattern because it seems to mean that NOT ONLY does it need to breakout, but if it does, it needs to come back and retests the breakout. If it fails the retest, it could result in a violent failure and thus a swift move down.

Although I don't know which "door" to pick, for these reasons, I've decided to not even play the game right now.

I might not be playing because I just read "Reminiscences of a Stock Operator". The one thing that (in this book) Livermore taught me is "let the markets tell you". So I repeat, not only does GLD have to break out, it has to come back and successfully retest.

Whatever the case, I think the hype and volatility will be beyond imagination. So rather than guess, I'll "let the market tell me".
]]> http://seekingalpha.com/article/159890-spx-short-straddle-still-hugging-1000-level?source=feed#comment-661604 661604
Using a long Oct strangle with this straddle creates a double diagonal, which has positive vega. This means that the trade would benefit from increasing volatility (as well as the Theta decay mentioned). FYI, we're entering the risky Sep-Oct time frame with the market having rallied strongly, not a good combo for "open ended" ("unlimited" risk) trades.

Finally, the author says "as we approach expiration, it will be interesting to see how this short straddle plays out." Statistics (depending whom you choose) seem to say the option expiration week is bullish 60-70% of the time and either way, options expiration week is notoriously volatile, with the Tue or Wed before X often experiencing big moves. Thus I would NOT stay too long in this trade, say, exiting by the end of Mon of options X week.]]> Fri, 04 Sep 2009 09:29:47 -0400
Using a long Oct strangle with this straddle creates a double diagonal, which has positive vega. This means that the trade would benefit from increasing volatility (as well as the Theta decay mentioned). FYI, we're entering the risky Sep-Oct time frame with the market having rallied strongly, not a good combo for "open ended" ("unlimited" risk) trades.

Finally, the author says "as we approach expiration, it will be interesting to see how this short straddle plays out." Statistics (depending whom you choose) seem to say the option expiration week is bullish 60-70% of the time and either way, options expiration week is notoriously volatile, with the Tue or Wed before X often experiencing big moves. Thus I would NOT stay too long in this trade, say, exiting by the end of Mon of options X week.]]> http://seekingalpha.com/article/156064-spy-option-hedge-strategy?source=feed#comment-660603 660603
I edited my blog post slightly, giving charts # so you may follow text better. Also, I'm not sure how often I'll post here, but I love yahoo.com... Can't you guess my "e" address (but put "SA Options/Blog" or the like in the title so I won't think it's spam).

Note, as I said in my blog, Dan Sheridan is where I've learned most of my trading strategies. He posts "Option Safari" on the CBOE website and a couple of days ago he discussed "his bearish calendar stratey" for the SPY. His was VERY short-term (30days) and used NOT so out-the-money (so risk:return was even, not "long-shot" insurance like mine). Nonetheless, his frequent point is important to grasp... (paraphrasing) "How do you get hurt in options? Price and volatility movement." Thus he used a calendar to benefit from BOTH a price down move and the accompanying spkie in volatility (dbl diag=2 calendars=wider shotgun approach). Here's the link...

www.cboe.com/tradtool/...

You can sign up at CBOE for e-mail notifications
]]> Thu, 03 Sep 2009 13:53:44 -0400
I edited my blog post slightly, giving charts # so you may follow text better. Also, I'm not sure how often I'll post here, but I love yahoo.com... Can't you guess my "e" address (but put "SA Options/Blog" or the like in the title so I won't think it's spam).

Note, as I said in my blog, Dan Sheridan is where I've learned most of my trading strategies. He posts "Option Safari" on the CBOE website and a couple of days ago he discussed "his bearish calendar stratey" for the SPY. His was VERY short-term (30days) and used NOT so out-the-money (so risk:return was even, not "long-shot" insurance like mine). Nonetheless, his frequent point is important to grasp... (paraphrasing) "How do you get hurt in options? Price and volatility movement." Thus he used a calendar to benefit from BOTH a price down move and the accompanying spkie in volatility (dbl diag=2 calendars=wider shotgun approach). Here's the link...

www.cboe.com/tradtool/...

You can sign up at CBOE for e-mail notifications
]]> http://seekingalpha.com/article/156064-spy-option-hedge-strategy?source=feed#comment-658357 658357
I assume everyone knows = click on TOS charts the enlarge them.

If you look at dd chart (4th), the green line says breakeven ("BE") is 93.60, ASSUMING NO CHG IN VOLATILITY. If volatility was drifting down, the "long far" options will lose value (relative to "short near")and the "BE" will drift lower than 93.60.

Look at chart 5, which is the essence of my post. Chart 5 is the one showing what happens if volatility increases by 10% (the vix is up by 4 already!). Both PL lines move up, so the upside breakeven moves higher.

FYI: PL today:
looking at the trade today with the IV incr, it's up about $15 on $165 "full" margin (9%), which my guess would be is mostly due to IV chg (SPY is 100.30 vs 100.79 when I "put it on"). Thus, it's insuring me!]]> Wed, 02 Sep 2009 11:28:58 -0400
I assume everyone knows = click on TOS charts the enlarge them.

If you look at dd chart (4th), the green line says breakeven ("BE") is 93.60, ASSUMING NO CHG IN VOLATILITY. If volatility was drifting down, the "long far" options will lose value (relative to "short near")and the "BE" will drift lower than 93.60.

Look at chart 5, which is the essence of my post. Chart 5 is the one showing what happens if volatility increases by 10% (the vix is up by 4 already!). Both PL lines move up, so the upside breakeven moves higher.

FYI: PL today:
looking at the trade today with the IV incr, it's up about $15 on $165 "full" margin (9%), which my guess would be is mostly due to IV chg (SPY is 100.30 vs 100.79 when I "put it on"). Thus, it's insuring me!]]> http://seekingalpha.com/article/156064-spy-option-hedge-strategy?source=feed#comment-658323 658323
CS/CSG - perhaps the main reason for 75/80 is this play is primarily a hedge entering the SEP/OCT period when mkt can tank. It's insurance because it's below what should be strong support around 900+-25. This made it somewhat cheap (I've got this in SPX with $2k providing ~$20k "protection"). I know very little about port. beta wgt'g.]]> Wed, 02 Sep 2009 11:10:31 -0400
CS/CSG - perhaps the main reason for 75/80 is this play is primarily a hedge entering the SEP/OCT period when mkt can tank. It's insurance because it's below what should be strong support around 900+-25. This made it somewhat cheap (I've got this in SPX with $2k providing ~$20k "protection"). I know very little about port. beta wgt'g.]]>